A Bloomberg report said the stake acquisition of Anbang Insurance Group in China Merchants Bank Co has fueled speculation that the insurance firm is no longer interested in Hong Kong-based Wing Hang Bank Ltd. Anbang bought a $2.1 billion stake in China Merchants Bank, the report said.
The property and casualty insurance unit of Anbang purchased 1.13 billion Shanghai-traded shares of China Merchants Bank. Citing a Hong Kong Stock Exchange filing by Shenzhen-based China Merchants Bank, Bloomberg reported that the acquisition increased the insurer's stake in the lender to an estimated 5% of the total share capital. Although the price of the acquisition was not disclosed, Bloomberg reported that it would be worth $2.1 billion based on today's trading in Shanghai.
News of the stake acquisition apparently spurred the drop of Wing Hang shares, the report said, as it dipped 1.8% in intraday Hong Kong trading to HK$110.70. This was the lowest intraday price of the shares since November 28. Two people with knowledge of the matter told Bloomberg last week that Anbang had balked at Wing Hang's asking price. Wing Hang is the second biggest family-run bank in Hong Kong.
Asian Capital Holdings Ltd Chief China Adviser Ronald Wan told Bloomberg in a phone interview, "Anbang's investment in China Merchants Bank could mean they're dropping interest in Wing Hang Bank. If they can't agree on a price with Wing Hang, it's a dead end."
The sources interviewed by Bloomberg had said that Anbang is not willing to pay more than 1.7 times this year's book value of Wing Hang. They said this is less than an asking price of about two times.
According to Bloomberg, China Merchants Bank also dropped 1.5% in Hong Kong trading. It is the sixth biggest lender in the mainland in terms of market value. The city's benchmark Hang Seng Index also fell 1.3%, the report said.
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