Minsheng seeking ways to enter Hong Kong
By Liu Weiling and Hu Yuanyuan (China Daily)
Updated: 2006-03-07 06:14

Although it has given up on bidding to acquire the Hong Kong-based Asia Commercial Bank, the China Minsheng Banking Corp is still looking for acquisition opportunities so it can tap into the Hong Kong market.

Dong Wenbiao, president of the bank, told China Daily yesterday that his bank is "keen" to enter the international financial hub and buying a local bank could be a better stepping stone than establishing a branch there.

He said there were lots of opportunities in Hong Kong as the Hong Kong Monetary Authority is also trying to find partners or buyers for some of the small local banks. But he declined to name potential targets.

Both Minsheng and China Construction Bank wanted to buy the Asia Commercial Bank, which has 12 branches in Hong Kong, a branch in Shenzhen and representative offices in Shanghai and Shenyang. It was finally bought by a Malaysian bank for HK$4.5 billion (US$592 million) last month.

"Hong Kong is the most developed financial market in East Asia," said Dong. "Minsheng must go there if it is to become a real international bank."

The bank is also searching for acquisition opportunities on the mainland. "There are enormous opportunities here as China's banking industry has entered into an era of merges and acquisitions," added Dong.

To fund expansion, the Shanghai-listed bank will continue to get funds from the capital market.

"We will wait for a good time to float H shares in Hong Kong," he said.

It passed the first hearing by the Stock Exchange of Hong Kong in June 2005, but there were no further details of any timetable.

Minsheng first initiated proposals to go public in Hong Kong in 2004 but later halted the plan before conducting split-share reforms to make all of its shares tradable.

"We have never said that we have given up the Hong Kong listing plan," he said. "But as an A-share listed company, the pricing of H shares is a topic which many are concerned about. So we have to be careful."

Dong said the bank didn't rule out the possibility of other kinds of fundraising methods.

"The domestic stock market is reviving," he said. "And the share prices of Minsheng shot up more than 45 per cent after we accomplished the split-share reforms."

Minsheng shares closed at 4.99 yuan (61.6 US cents) yesterday, down 0.8 per cent on the previous day.

Dong also disclosed that Temasek Holdings Pte, a US$54 billion Singapore government fund which owns a 4.55 per cent stake in Minsheng, wants to raise its stake in the bank.

"The market will decide by how much it can boost the holding," Dong said.

He Xiaohua, a spokeswoman at Temasek, declined to comment. But she said Temasek was keen to invest in State-owned enterprises (SOEs) or other large companies that had high regional or global potential.

There are other ways Minsheng can raise cash, for example, by selling some non-performing loans to assets management companies.

Dong said that Minsheng will gradually phase out lending to big State-owned enterprises, which now accounts for about 20 per cent of the bank's business, in an effort to expand its retail business and focus more on services to small and medium-sized enterprises (SMEs).

"We hope the retail business can account for 40 per cent of the bank's total," he said. Now, the share is about 10 per cent, up from 3 per cent in 2003.

He said the bank will invest heavily to tap the potential in this field, which has relatively low risks. The ratio of non-performing loans in the bank's mortgage loan business is a mere 0.25 per cent.

(China Daily 03/07/2006 page9)