Life of Guangzhou - ICBC Seeks to Expand in Hong Kong After Bidding for Wing Lung

Industrial & Commercial Bank of China Ltd., the world's biggest by market value, is "seeking every opportunity'' to expand in Hong Kong following a bid for the city's Wing Lung Bank Ltd.

The Beijing-based lender, also known as ICBC, offered a "reasonable price'' for Wing Lung after it conducted due diligence in the second round of bidding, it said in a statement e-mailed today. It didn't say whether its bid was accepted or rejected.

China Merchants Bank Co., the nation's fifth largest by market value, beat out ICBC and Australia & New Zealand Banking Group Ltd. to hold exclusive talks with Wing Lung, people familiar with the matter said today, paving the way for the city's biggest banking acquisition in seven years.

Wing Lung Chairman Michael Wu and his family are seeking to sell a 53 percent stake. Under Hong Kong law, a buyer of the Wu family's stake would be required to make a full tender offer.

Wing Lung climbed 2 percent to close at HK$152.30 in Hong Kong today, giving the company a market capitalization of $4.5 billion. The stock has rallied 59 percent this year as speculation of a takeover mounted.

Chinese banks, seeking to develop revenue sources outside their main business of making loans, are targeting Hong Kong's banking market as the city builds closer ties with the mainland.

ICBC, which made its first acquisition in Hong Kong eight years ago, wants to lift overseas profit to 10 percent from 3 percent of earnings. Getting Wing Lung will boost its presence in the city by adding 35 branches and off-shore banking services to its mainland clients.

Having raised $22 billion in the world's largest share sale in October 2006, ICBC is expanding more aggressively overseas. The Beijing-based bank bought a 20 percent stake in South Africa's Standard Bank Group Ltd. for $5.4 billion.

Wing Lung, a family-run bank founded in 1933 with initial capital of $5,700, has $12 billion of assets. On April 30, the bank reported a first-quarter loss after writing off $61 million of investments in structured investment vehicles and collateralized debt obligations.

(By Luo Jun and Chia-Peck Wong)

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