Fubon Bank’s selling was blocked due to demonstrations

Fubon Bank, which has been on the shelves for sale, has rumors yesterday

Bloomberg quoted sources as saying that Fubon Bank’s parent company, Taiwan’s Fubon Financial Holdings, had negotiated with potential buyers in mainland China for the sale of Hong Kong business in recent months, but progress has been hindered by recent demonstrations in Hong Kong, and local events may also affect The valuation of its sales. Fubon responded to this newspaper and said that there is no comment on market rumors. Ming Pao reporter Ouyang Weiwei

According to the report, 21 consecutive weeks of protests have caused many companies to shelve potential investments in Hong Kong

Recent demonstrations have intensified, and many Chinese bank branches and teller machines have been damaged. In addition, demonstrations have also affected economic activities such as local tourism and retail. These events have affected the progress of the sale of Fubon Bank.

However, Fubon Financial Holdings and potential buyers have not given up the transaction, and both parties are still interested in reaching an agreement, but it takes longer to implement

Last year, I hoped that the price-to-book ratio would be 1.5 times. The two parties did not give up Fubon’s intention to sell Hong Kong business in 2017. Last year, it was also appointed by UBS to assist in processing. It hopes to sell at a price-to-book ratio of 1.5 times. The target valuation is 20 Billion to 3 billion US dollars (156.79 billion to 23,518 million Hong Kong dollars). As of the first half of this year, Fubon Hong Kong’s profit was 389 million yuan, down 22.17% year-on-year. There are currently 20 branches and 1 securities investment center.

Gradually rooted in Hong Kong, Hong Kong’s profit is not high. Fubon Financial Holdings acquired 75% of Hong Kong-based banks in 2003 for HK$4.3 billion, equivalent to 1.6 times the market value, and was privatized about 1.5 times the price-to-book ratio in 2011. .

Fubon hoped to develop Chinese business with banks in Hong Kong. However, after the opening of cross-strait finance, Fubon Huayi Bank, a subsidiary of Fubon, has gradually become rooted in the mainland market. On the contrary, Hong Kong’s business profits are not high, so the city intends to sell Fubon Bank. . Fubon Financial Holdings purchased a 19.95% stake in Xiamen Bank held by Fubon Hong Kong at the end of last year, which was further prepared by the market.

It is not easy for Hong Kong to grant a new banking licence. Hong Kong-funded banks have a market price in the early years. Most of the selling prices in recent years have exceeded the double-price ratio (see table). However, at the end of 2015, China tightened its M&A activities. BOC Hong Kong (2388) sold the Chiyou Bank to Xiamen International Bank for a price-only ratio of 1.6 times, which was worse than market expectations.

Chinese-funded enterprises have transferred to virtual banking licenses. It is understood that since the development of virtual banks by the HKMA in recent years, many Chinese-funded enterprises interested in the Hong Kong banking platform have applied for virtual banking licenses, which has led to the rumor that they will sell in addition to Fubon. East Asia (0023) and Daxin (2356) have also been selling rumors in the past two years.

There have also been rumors that ABC (1288), which is principally engaged in financial markets and trade finance business in Hong Kong, has the best chance of expanding its retail banking business in Hong Kong through acquisitions.

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