BOC Hong Kong (Holdings) (02388.HK) is mulling a sale of subsidiary Nanyang Commercial Bank (NCB), Reuters reported Thursday, citing people familiar with the matter.
One potential buyer is China Cinda Asset Management Co. (01359.HK), the report said, adding that the deal could be worth about US$6 billion.
NCB has a book value of about US$4 billion and bankers believe a transaction could be struck at about 1.5 times price to book, the report said.
Analysts said the low valuation reflects the relatively poor asset quality of the bank’s business in mainland China, which represents 40 percent of the total, the Hong Kong Economic Journal noted.
NCB, a wholly-owned unit, accounts for about 13 percent of BOC Hong Kong’s profit.
The anticipated divestment is part of BOC Hong Kong’s strategic move to reduce impairment costs and internal competition in renminbi businesses and other areas, the Economic Journal said.
BOC Hong Kong is an arm of the state-backed Bank of China (03988.HK).
Late Thursday, BOC Hong Kong said in a regulatory filing that it is conducting a feasibility study to review its business and asset portfolio. The initiative may or may not lead to asset disposal, it said.
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