Caixin
Mar 01, 2017 05:30 PM
FINANCE

Bank of China’s Hong Kong Unit to Acquire Two Southeast Asia BOC Branches

(Beijing) — The Hong Kong business unit of the Bank of China (BOC) has agreed to buy its parent’s branches in Indonesia and Cambodia for HK$2.9 billion ($373.6 million) as part of BOC’s broader strategy to turn its Hong Kong arm into a hub for business in Southeast Asia.

The Indonesia acquisition will cost HK$1.6 billion, while the price of the Cambodian unit is HK$1.3 billion, BOC Hong Kong (Holdings) Ltd. (BOCHK) said in a filing to the Hong Kong Stock Exchange on Tuesday.

The announcement came after BOC announced its plan to restructure its business in Southeast Asia in 2015 and sold its Malaysian and Thai branches last year to the Hong Kong subsidiary, in which it has a 66.06% stake.

The latest deal, which is subject to regulatory approval by Dec. 31 this year, would give BOCHK “the fast-growing and substantial development potential of the ASEAN markets” and “opportunities presented by the strengthening of economic integration between China, Hong Kong and ASEAN countries,” according to the filing.

Yue Yi, the Hong Kong subsidiary’s CEO, said in a separate statement that the proposed acquisition of the two branches is a crucial step for BOCHK to build a “firm foothold” in countries in the Association of Southeast Asian Nations (ASEAN) as a regional bank and support the nation’s “One Belt, One Road” initiative, which aims to connect China’s neighbors through a series of massive infrastructure projects.

“Southeast Asia is experiencing a rapid growth with substantial development potential, particularly from the opportunities arising from national strategies such as the Belt and Road Initiative, RMB internationalization and mainland enterprises going global,” Yue said.

BOC’s business in Indonesia is conducted by its office in the capital city of Jakarta. The branch, which was established in 1938, reported a net profit after taxes of 519 billion rupiahs ($38.9 million) in 2016, more than double the profit of 2015.

The Cambodia branch in Phnom Penh was set up in 2010. Its after-tax profit increased by 35% to $13.8 million last year.

Contact reporter Chen Na (nachen@caixin.com)

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