Bank of China (BOC) is handing over two businesses to BOC Hong Kong Holdings (BOCHK) following a restructuring of its Association of Southeast Asian Nations (ASEAN) assets that has been almost two years in the making.
The sale of operations in both Indonesia and Cambodia in two separate deals worth a combined 2.52 billion yuan (366.63 million U.S. dollar) will give the subsidiary immediate access to the fast-growing local markets.
BOCHK is keen to expand its footprint in the ASEAN, especially considering the strengthening economic integration between China and countries in this region.
Not only is there substantial development potential but more opportunities are opening up on the back of China’s internationalization of Renminbi.
While the Chinese currency became more prominent following the financial crisis as an alternative trade settlement to the greenback, market volatility has also hindered its development.
So, BOCHK is fully intending to use its parent’s network in both Indonesia and Cambodia, as well as Malaysia and Thailand, to anchor its foothold as a regional lender.
The restructuring was first mooted in May 2015 when BOC announced it was considering restructuring and transferring certain operations in ASEAN to its 66.1 percent subsidiary.
By June 2016 the two had agreed upon a sale of Bank of China Malaysia and Bank of China Thai and now it is the turn of two other businesses.
BOCHK is paying 2,989 billion Indonesia rupiah (223.95 million U.S. dollars) for BOC’s Jakarta unit which was established in 1938 and today carries out commercial activities such as deposit-taking, foreign exchange and factoring.
The group is spending 171.00 million U.S. dollars on BOC’s Cambodia operations, which were formed in 2010 and provides services ranging from trade financing to global cash management.
It had a net asset value of 115.70 million U.S. dollars as at the year ended December 2016 while the Indonesian business had a net asset value of 1,706 billion Indonesia ruphia.
(Source: Zephus Ltd.)
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