Wing Hang Bank Ltd. (00302.HK) will widen its customer base to include state-owned enterprises located in the Pearl River Delta region by leveraging the resources of Oversea-Chinese Banking Corp Ltd. (OCBC), the second-largest lender in Southeast Asia.
Wing Hang is more focused on small and medium-sized enterprises (SMEs) in Hong Kong and the Pearl River Delta, but with the help of OCBC, it will expand its client base to larger firms in the region, said OCBC chief executive Samuel Tsien.
The Singapore-based bank completed its HK$38.72 million (US$5 billion) acquisition of the Hong Kong lender late last month. The deal is the largest takeover of a Hong Kong bank since 2001.
“With its network in Hong Kong and Macau, Wing Hang can help create an offshore network for OCBC to capture cross-border fund flows and trade, especially between Greater China and the Southeast Asia markets,” Tsien told reporters in Hong Kong on Monday.
Tsien sees synergy initially in the wealth management, treasury and sales management businesses as they are expected to create significant value. “After that we would work on region-wide products.”
Synergy has been achieved from day one of the integration which is a never-ending process, he said.
OCBC’s private banking arm will also be able to gain access to Wing Hang’s clients, many of which are Chinese SMEs.
The Singapore firm will also leverage on Wing Hang to apply for more qualified foreign institutional investor quota.
OCBC is looking to raise US$2.7 billion from a rights issue to help fund its purchase of Wing Hang.
It plans to sell 440 million new shares at a 25 percent discount to Friday’s closing price of S$10.20 (US$8.18), the bank said in a filing to the Singapore Exchange Monday.
The rights issue “will enable the company to strengthen its balance sheet and enhance the financial flexibility of the group”, the statement said.
OCBC aims to accelerate the growth of the wealth management, retail and commercial banking and insurance businesses after the acquisition of Wing Hang.
Insurance seems to be a missing link of OCBC’s Greater China puzzle.
“We are looking into it as we believe there is a great potential if there is a way of [mutual recognition] of the insurance products between China and Hong Kong and Chinese want to buy insurance offshore,” Tsien said.
But a decision is yet to be made “as we prefer to use Great Eastern Holdings as the entity but Hong Kong Life Insurance has a well-established foundation for the local life insurance market”, he said.
Great Eastern is a unit of OCBC while Wing Hang Bank holds 33 percent of Hong Kong Life, as shown in the lender’s annual report.
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