Bank of China to sell M’sian unit for RM2bil in group restructuring

(L-R) The Hong Kong Exchanges flag, Chinese national flag and Hong Kong flag are hoisted outside the Hong Kong Stocks Exchange in Hong Kong June 7, 2016. REUTERS/Bobby Yip

KUALA LUMPUR: Bank of China Ltd (BOC) has kickstarted the restructuring of its Asean operations by selling its Malaysian and Thai units to its subsidiary BOC Hong Kong (Holdings) Ltd (BOCHK), one of Hong Kong’s biggest commercial banking groups.

In a statement to the Stock Exchange of Hong Kong, BOC said it signed an agreement on Thursday to sell the entire share capital of Bank of China (M) Bhd and Bank of China (Thai) Public Co Ltd to expand the business reach of BOCHK, in which it has a 66.06% induirect a stake, into the Asean region and enhance BOC’s regional customer service capabilities, among others.

“The proposed transfers represent an important initiative allowing the bank to seize the business opportunities arising from ‘One Belt, One Road’ initiative, the internationalisation of renminbi and ‘Going-Global’ by Chinese enterprises, and achieving its international growth strategy through the optimisation of the bank’s overseas presence and regional collaboration,” it said.

In a separate filing to the exchange, BOC’s Hong Kong subsidiary said the Malaysian unit was bought for RM2.025bil in cash, while the Thai operation for 14.9bil baht (RM1.69bil). Both purchases will be paid for in Hong Kong dollars.

Completion of the proposed acquisition of Bank of China Malaysia is conditional on the requisite regulatory approvals, including from Bank Negara, Malaysia’s Finance Ministry and the China Banking Regulatory Commission.

Bank of China Malaysia was incorporated in Malaysia in 2000 as a wholly-owned subsidiary of BOC. Currently with an issued share capital of RM760.5mil, it provides comprehensive corporate lending, trade financing, global loan facility, cross border trade settlements and personal banking solutions in the country to support the business development for both Malaysian and Chinese enterprises.

BOCHK said the Malaysian operation had also pioneered a wide range of yuan financial products and services.

Bank of China Malaysia has a subsidiary named China Bridge (M) Sdn Bhd. which handles China visa applications in Kuala Lumpur.

The net asset value of the Malaysian unit as at Dec 31, 2015, was RM1,182bil and last year it made a profit after tax of RM103mil.

BOCHK noted that the completion of the proposed acquisitions was not interconditional.