Bank of East Asia to Sell Insurance Business in Strategy Overhaul | Investing News

Bank of East Asia to Sell Insurance Business in Strategy Overhaul | Investing News

HONG KONG (Reuters) – Hong Kong-based Bank of East Asia Ltd (BEA) <0023.HK> said on Wednesday it had decided to initiate a sale of its insurance business following the completion of a review of its portfolios and assets.

The bank said in March it had agreed to carry out a review of its businesses, pausing four-year-old legal proceedings brought by activist investor Elliott Management demanding change at the lender.

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

Shares of BEA rose as much as 4.7% to HK$16.40 after the announcement, recovering from two consecutive sessions of falls.

BEA has survived as an independent lender in a Hong Kong market that is dominated by majors HSBC

, BOC Hong Kong <2388.HK> and Standard Chartered

, while several of the territory’s other family-owned firms have been put up for sale amid deteriorating business conditions.

Having hired Goldman Sachs

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 agreement would be a new source of revenue for the bank, it said.

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

“The sale of BEA Life will allow the bank to focus on its core banking operations in Hong Kong and mainland China,” BEA co-chief executives Adrian Li and Brian Li said in the statement.

Elliott had previously urged the bank to explore putting itself up for sale in an open letter to shareholders, in which it also said BEA was poorly run.

“The sale of BEA Life will be a good first step,” Jonathan Pollock, co-CEO and chief investment officer at Elliott Management Corporation, said in the BEA statement.

(Reporting by Alun John and Sumeet Chatterjee; Editing by Devika Syamnath and Muralikumar Anantharaman)

Copyright 2020 Thomson Reuters.

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