The Royal Bank of Scotland Group Plc yesterday said it's considering joining UBS AG and Hong Kong billionaire Li Ka-shing in selling its Bank of China Ltd shares after a three-year lock-up ended.
RBS, the biggest bank to be controlled by the United Kingdom government after a 20-billion-pound (US$30 billion) bailout, said it is "examining" its US$2.8 billion Bank of China stake as part of a company-wide review initiated last quarter.
RBS Chief Executive Officer Stephen Hester may seek to use a US$1.2-billion gain on the Bank of China stake to help repair a balance sheet that was crippled by more than 7 billion pounds of writedowns last year, Bloomberg News said. Chinese lenders have mostly avoided the toxic investments that forced RBS and UBS to post losses and seek government help.
The Bank of China shares yesterday tumbled 8.41 percent to HK$1.96 (25 US cents) in Hong Kong yesterday, lower than the 3.81-percent drop of the Hang Seng Index. Its yuan-backed A shares shed 2 percent to 2.94 yuan (43 US cents) in Shanghai where the Shanghai Composite Index lost 2.38 percent.
The Li Ka-shing Foundation, the charitable foundation owned by Hong Kong's richest man, sold 2 billion shares in the Beijing-based bank in a placement that raised US$511 million late on Wednesday. The H shares were placed to investors at HK$1.98 each, a 7.5-percent discount on the bank's Wednesday closing price of HK$2.14 in Hong Kong. The placement price is at the bottom of the price range of HK$1.98 and HK$2.03.
The foundation bought the shares during the lender's initial public offering in Hong Kong in 2006.
It turned out to be the second heavy-selling within 10 days after the 3.4 billion shares sold by UBS on December 31.
There were 14.36 billion H shares of the bank eligible for sale after December 30. These were held by Temasek, UBS and Asian Development Bank. UBS has already sold its holding.
Henry Wang, a Guotai Jun'an Securities (Hong Kong) Ltd analyst, said the foundation's selling may be triggered by concerns over the heavy selling by the bank's strategic investors.
"We believe it's possible more shares will be sold," said Wang in a research note yesterday. "RBS is likely to be the next seller because it needs the cash."
"If the price drops substantially because of other strategic investors selling shares, there might be good buying opportunities for long-term investors," Wang said, rating BOC neutral.
HSBC Holdings Plc, Europe's largest bank by market value, yesterday said it has no plan to sell shares in the Bank of Communications. Bank of America sold US$2.8 billion of China Construction Bank shares on Wednesday.
(Shanghai Daily January 9, 2009)
