Hong Leong Bank in talks to acquire HK bank stake

Hong Leong Bank Bhd, the country’s sixth largest commercial bank, is in preliminary talks to acquire a stake in Hong Kong-listed International Bank of Asia Ltd (IBA). 

In a statement to the KLSE yesterday, Hong Leong Bank said it had applied for Bank Negara approval for the proposed acquisition. The bank did not disclose the identity of the potential seller of the stake. 

“At this juncture, the discussions are at a preliminary stage and no terms, including as to price, have been agreed,’’ Hong Leong Bank said. 

“The bank understands that the potential seller had been engaged in discussions with other parties and it is not certain at this stage, that the deal will materialise. If the discussions crystallise into a definitive agreement, the bank will make an immediate announcement,’’ Hong Leong Bank added. 

Hong Leong Bank, controlled by tycoon Tan Sri Quek Leng Chan, made the disclosure after reports that the Hong Leong group and Quek might bid for a 55% stake in IBA, currently owned by Bahrain-based Arab Banking Corp (ABC). 

On Jan 23, IBA, the smallest of the 12 listed banks in Hong Kong, told the Hong Kong Stock Exchange that ABC was engaged in preliminary talks with a number of parties over its shareholdings in the Hong Kong Bank. 

It was reported that the Hong Leong group might offer as much as HK$4 a share, or up to 1.8 times of IBA’s book value, for the ABC’s 55% stake in IBA.  

According to wire reports, if the stake was sold at HK$4 per share, ABC would get HK$2.6bil. 

IBA also revealed that another shareholder, China Everbright Ltd that owns a 20% stake in IBA, was also considering a sale, should an offer be made, although no final decision has been reached. 

Trading in IBA shares was suspended from the Hong Kong Stock Exchange yesterday at HK$2.60, pending the announcement. 

The IBA stake purchase by Hong Leong Bank, if successful, would mark the return of Quek into banking in Hong Kong after his Guoco Group Ltd sold Dao Heng Bank Group Ltd to Singapore’s DBS Group Holdings Ltd in 2001 for US$5.3bil, or 3.33 times over Dao Heng’s book value. 

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