Hang Seng Bank to Sell Industrial Bank Stake for $2 Billion

by Alfred Liu

(Bloomberg) -- Hang Seng Bank Ltd., the Hong Kong lender controlled by HSBC Holdings Plc, will sell a stake in China’s Industrial Bank Co. for as much as $2 billion to boost capital.
The transaction will involve the sale of as much as 952 million shares, a 5 percent stake, at 13.36 yuan each, Hang Seng Bank said in a Hong Kong stock exchange filing. That represents a deal size of 12.73 billion yuan ($2 billion) and a discount of about 7 percent to the closing price of Industrial Bank on the Shanghai Stock Exchange.
Hang Seng joins global banks including Bank of America Corp. and Goldman Sachs Group Inc. which have raised at least $14 billion divesting shares in Chinese financial institutions since the start of 2012. Rules developed since the global financial crisis have made it more expensive to hold minority investments in banks.

The sale to institutional investors was an opportunity “to strengthen the bank’s regulatory capital position and ability to meet future regulatory requirements,” Hang Seng said. The lender will keep a 5.87 percent stake after the disposal and regularly review the holding, it said.
Shares of Fuzhou-based Industrial Bank closed 1.8 percent higher at 14.37 yuan before the announcement. The stock has climbed 52 percent in the past year, giving the company a market value of $43.9 billion.