China Construction Bank (CCB) on Thursday inked an agreement
with Bank of America (BOA) to acquire 100 percent of equity
interest in Bank of America (Asia) Limited, the wholly owned
subsidiary of BOA in Hong Kong.
Payable in cash, the acquisition is valued at 9.71 billion HK
dollars (about US$1.24 billion), representing nearly 1.32 times of
the book net assets of BOC (Asia) worth 7.38 billion HK dollars
(about US$949 million).
The acquisition is subject to the approvals of the Chinese and
overseas authorities and CCB shareholders in a general meeting.
Officials from CCB and BOA said that they expected the
acquisition will be completed before the end of this year.
"Bank of America (Asia) shows little overlapping with CCB
business in Hong Kong. Therefore, it is a very appropriate choice
of acquisition for us," said Zhang Jianguo, the newly appointed CCB
President.
After the acquisition, CCB's business in Hong Kong will more
than double, and the total amount of customer loans will be the 9th
highest in the Hong Kong banking industry, said Fan Yifei, vice
president of CCB.
"The acquisition will immediately enhance the per share earnings
of CCB," he noted.
Also on Thursday, CCB announced its 2006 interim results in Hong
Kong. For the six months ending June 30, 2006, the bank reported
operating income of 70.86 billion yuan (US$8.89 billion), up 12.6
percent over the same period last year.
Meanwhile, CCB scooped a net profit of 23.23 billion yuan
(US$2.91 billion), jumping 13.3 percent over the corresponding
period last year.
The bank's earnings per share stood at 0.10 yuan (about one US
cent), while its non-performing loan ratio decreased from 3.84
percent at the end of last year to 3.51 percent.
"The acquisition deal has created a win-win situation for both
parties," said a spokesman of CCB, noting that the deal will help
CCB to expand its overseas presence and retail banking
business.
Bank of America (Asia), locally incorporated with more than 90
years' history, is one of the longest established banks in Hong
Kong. In 1992, the bank became part of BOA and has now 17 banking
centers in Hong Kong and Macao.
One of the highest rated banks in Hong Kong, BOA (Asia) reported
an after-tax net profit of 537 million HK dollars (US$69.2 million)
in 2005.
CCB is China's third-largest commercial bank and was listed on
the Hong Kong Stock Exchange in October last year.
"CCB will be developed into an integrated financial service
provider in Hong Kong, with retail banking, wholesale banking,
investment banking and insurance service as its pillar businesses,"
Zhang.
(Xinhua News Agency August 25, 2006)