STOCKWATCH: HKCB Bank sharply higher on renewed takeover speculation

HONG KONG (AFX-ASIA) - HKCB Bank shares were sharply higher in early trade, on renewed speculation that it will receive a takeover bid proposal from a third party, after a report that China Resources (CRE) has asked Credit Lyonnais to seek a buyer for its 34 pct stake in HKCB Bank Holdings.



          At 10:52 am, HKCB Bank was up 0.225 hkd or 6.52 pct at 3.675, on trade of 14.31 mln shares.



          The Hang Seng index was down 167.58 points at 13,470.29.



          Patrick Pong, an analyst with HKCB Bank, said it would not be sensible for CRE to sell its stake in HKCB Bank at the moment because of the latter's continuous business improvement.



          "The upturn in today's price is purely rumour driven," he said.



          "We met the management of HKCB Bank. It plans to further improve its balance sheet ... it has a non-performing loan (NPL) ratio of 9.10 pct at 2000-end, compared with the industry average of 5.0," he said.



          "HKCB Bank is planning to reduce its NPL ratio to 5.0 pct by this year-end," he said.



          Pong said China Resources can obtain a better price from the stake sale in HKCB Bank if it waits for the latter's business turnaround.



          He said HKCB is also expected to see a better financial year in 2001, because of its diversification into the consumer lending and small enterprise loan business.



          The analyst noted that China Resources should have no immediate need to raise more funds, after its recent issue of 200 mln usd convertible guaranteed bonds.



          "We met the management of China Resources a few months ago and they did not mention any plan to sell its stake in HKCB Bank," he said.

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