[BEIJING] Hang Seng Bank Ltd, the Hong Kong lender controlled by HSBC Holdings Plc, is considering selling its 10.9 per cent stake in China's Industrial Bank Co, people familiar with the matter said.
The bank may first divest about half its holding, with the rest to be sold at a later date, one of the people said, asking not to be identified as the information is private. The stake is valued at about US$4.8 billion based on Industrial Bank's current share price.
Hang Seng, based in Hong Kong, would join global banks including Bank of America Corp and Goldman Sachs Group Inc which have raised at least US$14 billion divesting shares in Chinese financial institutions since the start of 2012. Hang Seng's stake in Industrial Bank, based in Fuzhou city, may have become less appealing under regulatory requirements that lenders hold extra capital against minority investments.
The Chinese lender's shares have climbed 54 per cent in the past year, giving the company a market value of US$43.8 billion. Fujian province's finance department, which is Industrial Bank's largest investor, may buy part of the stake from Hang Seng, one person said.
Industrial Bank has been "consulted occasionally" about the potential sale, which hasn't been confirmed by Hang Seng, a press officer from the Chinese bank wrote in a text message Tuesday, citing a reply from the company's board office. Hang Seng Bank Chief Financial Officer Andrew Leung declined to comment, as did a man who answered the phone at the Fujian province's finance department.
Hang Seng bought 16 per cent of Industrial Bank in December 2003 for HK$1.62 billion (US$209 million). In January 2013, it reclassified its shares in the bank as a financial investment, reaping a one-time HK$9.5 billion accounting gain.
Shares of the Hong Kong lender gained 12 per cent in the past year, compared with the benchmark Hang Seng Index's 11 per cent advance.