China Resources in race to buy $8.8bn Nanyang Bank

BloombergBeijingChina Resources Holdings, the conglomerate that controls the nation’s most popular beer brand, is joining the bidding for Hong Kong lender Nanyang Commercial Bank, people with knowledge of the matter said.China Resources, which bankrolled Nanyang’s founding more than half a century ago, is among suitors weighing binding offers for the lender by next month’s deadline, according to the people. It is vying with bad-loan manager China Cinda Asset Management, which is also considering a bid, the people said, asking not to be identified as the information is private.BOC Hong Kong Holdings said this month it’s seeking at least HK$68bn ($8.8bn) for Nanyang as part of a push to focus more on Southeast Asia. A deal would add to the $8.7bn of bank takeovers in Hong Kong over the past five years as the city’s role in cross-border financing expands, data compiled by Bloomberg show.China Resources won approval from the Hong Kong colonial government to set up Nanyang in 1949, the year the People’s Republic of China was founded, according to the conglomerate’s website. It then transferred the banking licence and some seed funding to Chuang Shih-ping, a patriotic businessman who supported China’s new Communist regime.Nanyang raised the five-starred red flag of Mao Zedong’s Chinese government on its opening day, making it one of the first institutions in the British territory to do so, according to an interview posted on the bank’s website. It also helped facilitate some of the initial foreign investments in China when the nation began opening up its economy in the 1980s, the interview shows.State-owned China Resources controls China Resources Enterprise, the brewer of Snow beer, as well as the Vanguard grocery chain, power plants, cement production and drug manufacturing. It runs a bank in the southern Chinese city of Zhuhai, across the border from the gambling hub of Macau, as well as an asset management firm and real estate fund.China Resources expressed interest in Nanyang early in the sale process, though it wasn’t as active in later rounds, according to two of the people. It’s still allowed to come back now and make a binding offer under the terms of the auction, the two people said.There’s no certainty China Resources and Cinda will proceed, and other bidders could still join the process, according to the people. Representatives for BOC Hong Kong and Cinda declined to comment, while a spokeswoman for China Resources said she couldn’t immediately comment.Cinda, based in Beijing, was created in 1999 to buy bad debts from state-owned Chinese banks on the verge of insolvency.The company, which had 544.4bn yuan ($87.7bn) of total assets at the end of last year, has been expanding to offer other financial services including fund management, insurance, leasing and securities broking.BOC Hong Kong, an arm of China’s fourth-largest lender, said on July 15 it would only accept bids from Chinese state-owned enterprises with experience operating a financial institution.The bidding is expected to close on August 25, according to a statement posted to the Beijing Financial Assets Exchange that day. Cinda, China Life Insurance Co, New China Life Insurance Co and Yue Xiu Group, owner of Hong Kong’s Chong Hing Bank, were shortlisted to make offers for Nanyang, people with knowledge of the matter said in May. Nanyang had 42 branches in Hong Kong and 38 outlets in mainland China at the end of 2014, with HK$303.9bn of consolidated assets, according to its annual report.