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Tuesday, March 10, 2020, 12:48
Bank of East Asia considers US$1 billion insurance asset sale
By Bloomberg
Tuesday, March 10, 2020, 12:48 By Bloomberg

Signage for Bank of East Asia Ltd. (BEA) is displayed at a branch in Hong Kong, China, on Feb 16, 2019.  (ANTHONY KWAN / BLOOMBERG)

Bank of East Asia Ltd, the Hong Kong lender that has been besieged by activist investor Paul Singer’s Elliott Management Corp, is considering options including a sale of insurance assets as part of its strategic review, according to people familiar with the matter.

A deal for the life insurance assets could include a so-called bancassurance partnership

BEA could seek more than US$1 billion from a sale of assets including its life and general insurance as well as its pension fund business in Hong Kong, the people said, asking not to be identified because the deliberations are private. A deal for the life insurance assets could include a so-called bancassurance partnership, in which an insurer typically pays an upfront amount for exclusive rights to sell its products at bank branches, the people said.

READ MORE: David Li, BEA head and HK's longest-serving CEO, steps down

The disposals could attract interest from global insurers seeking to expand in the region amid increasing consolidation in the industry, the people said.

BEA announced last week that it had hired Goldman Sachs Group Inc. for a review of its business and assets that could lead to transactions. The process is supported by Elliott Management, which has paused court proceedings it started in 2016 against the bank and certain former and serving directors. Elliott owns about 8% of its shares.

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Considerations are preliminary and BEA could still decide to keep the assets or pursue other deals, the people said. A representative for BEA declined to comment on the specific potential disposals, referring to the announcement last week.

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