Five Banks Slug It Out For Chase Manhattan's Hong Kong Retail Business

Mary Swire, Tax-news.com, Hong Kong

07 July 2000

According to reports, there are now five banks jostling to gain possession of US bank Chase Manhattan's retail operations in Hong Kong, worth around US$1 billion, which have been put up for sale following Chase's purchase of British investment bank Robert Fleming. An earlier report in the UK's Sunday Business had suggested that international bank Standard Chartered PLC was widely viewed as the front-runner, but Hong Kong's Bank of East Asia, Citibank, Development Bank of Singapore and Singapore's Oversea-Chinese Banking Corp are also in contention.

Chase is selling its Hong Kong retail arm as its focus has changed: it is now more involved in investment banking and fund management and its Hong Kong operations are surplus to requirements. In so doing it has created a good opportunity for other banks to boost their share of the Hong Kong retail market. The five shortlisted banks are likely to bid up to US$1 billion for the operations of four branches, a loan portfolio and a credit card operation.

The five banks are aware that the price tag is hefty and yet analysts say that the cost of missing an opportunity like this could prove even greater in terms of market position. Standard Chartered is hoping to catch up with HSBC, which has made a huge push into the Far East, and more generally to increase its presence in the region - it has already made acquisitions in Thailand and, most recently, India, where the bank paid US$1.3 billion to buy Grindlays from Australia's ANZ.

Whilst Standard Chartered might be in pole position, banks such as DBS and Bank of East Asia are hot on its tail. Bank of East Asia, for example, is already strong in the region and has used its prowess in online banking to boost its local business significantly. The bank says it has 90,000 registered users online and could well be one of the first banks to set up a purely Internet bank in Hong Kong, perhaps even by the end of this year. Moreover, if the bank was successful in its bid for Chase's Hong Kong retail arm, its assets would top US$20 billion, which would make it eligible to begin full branch operations in mainland China.

Development Bank of Singapore, which also has a couple of small acquisitions under its belt and is growing in stature, is keen to get control of Chase's business. A local banking analyst watching the deal said 'DBS wants to increase its presence in Hong Kong and is not shy about paying an above average price for it.' Singapore's Oversea-Chinese Banking Corp and Citibank, a unit of America's Citigroup, are also said to be among the serious contenders.

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