Bank of East Asia sells insurance business with backing from Elliott

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HONG KONG (Reuters) – Bank of East Asia Ltd (BEA), based in Hong Kong 0023.HK on Wednesday announced that it has decided to initiate a sale of its insurance business and to seek a strategic partner for its mainland China business after a review of its portfolios and assets.

FILE PHOTO: A Bank of East Asia logo is displayed at a press conference in Hong Kong, China in this file photo from February 15, 2016. REUTERS / Bobby Yip / Files

The bank said in March it had agreed to conduct the review, halting four-year lawsuits by activist investor Elliott Management demanding a change at the lender.

The BEA, whose main markets are Hong Kong and mainland China, said in its statement on Wednesday that Elliott supported the move.

BEA shares rose 4.7% to HK $ 16.40 after the announcement, recovering from two consecutive sessions of drops. They have lost around 20% in the past 12 months.

BEA survived as an independent lender in a Hong Kong market dominated by HSBC majors HSBA.L, BOC Hong Kong 2388.HK and Standard Chartered STAN.L, while several other family businesses in the territory were put up for sale in a context of deteriorating commercial conditions.

Having hired Goldman Sachs GS.N To assist with the review, BEA said it would seek to enter into a long-term exclusive distribution agreement with the buyer of BEA Life. The deal would be a new source of income for the bank, he said.

BEA Life is a wholly-owned subsidiary of the bank in Hong Kong and reported gross written premiums of HK $ 4.8 billion ($ 620 million) in 2019, the lender said in a Hong Stock Exchange filing. Kong.

In addition, BEA will seek “to develop its core businesses, particularly through strategic and synergistic partnerships with, but not limited to, our banking activities in mainland China,” the document said.

Elliott, who owns 7.5% of BEA according to Refinitiv’s Eikon data, previously urged the bank to consider listing itself in an open letter to shareholders, saying it was mismanaged.

“The sale of BEA Life will be a good first step and we look forward to continuing our engagement as the company follows through on this and other important review findings,” Jonathan Pollock, Co-CEO and Chief Investment Officer of ‘Elliott Management Corporation, said in a press release from the BEA.

In 2016, Dah Sing Financial, another local Hong Kong bank, sold its life insurance business for $ 1.4 billion, the financial centre’s most expensive insurance merger and acquisition, in a surge in transactions issued by Chinese investors with deep pockets.

Reporting by Alun John and Sumeet Chatterjee; Editing by Devika Syamnath, Muralikumar Anantharaman and Kim Coghill

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