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China Life drops buy bid

By Hu Yuanyuan (China Daily)
Updated: 2009-02-26 07:53

China Life Insurance Co, the country's biggest life insurer, will not be buying a 10 percent stake in Hong Kong's Wing Hang Bank Ltd from the Bank of New York Mellon Corp, the bank said in a statement to the Hong Kong bourse yesterday.

Related readings:  China Life's 2008 net profit may fall more than 50%  China Life premium jumps 53% in first 11 months  China Life eyes stakes in lenders

"We have made enquiries of the parties to this potential transaction and have received confirmation that the parties currently have no intention to proceed with the transaction," said the statement.

The statement confirms that there are no negotiations or agreements related to the intended acquisitions, which have to be disclosed under the listing rules.

"The statement implies that the two parties may end the deal they inked in August 2008," said Wang Xiaogang, a senior insurance economist with Shanghai-based Orient Securities. "In fact, I can hardly see any motive for China Life to acquire Wing Hang Bank."

Wing Hang Bank (WHB) was founded in Guangzhou as a money-changing business in 1937 by the late Y K Fung and has been operating in Hong Kong for the past 70 years. WHB Group now has over 50 branches and representative offices throughout Hong Kong, Macao and the mainland.

"China Life is not likely to boost its bancassurance business through the acquisition," said Wang.

Wing Hang Chairman Patrick Fung's family would also be required to make a general offer for the Hong Kong lender if China Life had proceeded with the purchase, the Securities and Futures Commission said in a statement on Tuesday, citing a ruling made on Aug 20 last year.

Had the purchase proceeded as per plan, China Life would have to be considered as acting in concert with the Fung family, which was simultaneously seeking to buy an additional 5 percent stake in Wing Hang from Bank of New York Mellon, the statement said.

The publication of the ruling was deferred "at the request of the parties due to the confidential and price-sensitive nature of the matter at the time," the SFC statement said.

Wing Hang Bank's principal retail banking activities in Hong Kong and Macao are retail banking, corporate banking and foreign exchange and treasury services, according to its website.

In addition, through its subsidiaries, the Bank provides nominee, offshore banking, hire purchase, consumer financing, share brokerage services, insurance underwriting, insurance agency and insurance broking.