Sources told Bloomberg that Yue Xiu Group was nearing a deal to buy Hong Kong-based Chong Hing Bank. Yue Xiu is the trading arm of the City Government of Guangzhou, China. The people said an official announcement could be made this week. At the close of trading today, the market value of Chong Hing rose to USD 2.1 billion or HKD 16.3 billion. Earlier in August, Chong Hing said it was approached by potential bidders.
The acquisition of Chong Hing would provide Yue Xiu with a network of 53 outlets. This would enable Yue Xiu to give offshore financing to Chinese firms. According to Daiwa Capital Markets Hong Kong Analyst Samuel Ng, "If Yue Xiu can gain a bank, it will be easier for them to offer cross-border financing," There's room to expand that business."
The role of Hong Kong as an international trading hub for the Chinese currency had lured China-based financial institutions that want to grow abroad, Bloomberg reported.
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