Yue Xiu makes US$1 billion bid for Chong Hing Bank

Is arranging financing for expanded acquisition.

Yue Xiu Group is considering expanding its control of Hong Kong family-run lender Chong Hing Bank Ltd. The Liu family owns some 60% of Chong Hing valued at US$756 million.

Chong Hing‘s shares were suspended Wednesday following news that Yue Xiu had raised US$1 billion to takeover of the lender, one of whose shareholders is Japan’s Mitsubishi UFJ Financial Group.

Chong Hing is the smallest of Hong Kong’s four family-run banks. Its first-half net income rose 6.4% from a year earlier to HK$276 million. Yue Xiu Group is a trading arm of the Guangzhou city government.

Chong Hing Chief Executive Officer Lau Wai-man recently said that the lender was open to proposals from prospective buyers for all or part of the bank. Takeover speculation has risen since November when Lau became the first CEO from outside the Liu family.

Analysts noted that cross-border financing will be the key growth driver for Hong Kong banks in the next few years, and that a mainland partner will be good for mid-cap banks.