Australia and New Zealand Banking Group (ANZ) is still in the running for Hong Kong's mid-tier Wing Lung Bank, Chief Executive Michael Smith said yesterday.

Brushing aside reports that the auction was effectively over and that Wing Lung, valued at around $4.8 billion, would end up in the arms of a mainland bank, Smith said: "The bidding hasn't finished, so let's see what happens." He was speaking to reporters on the sidelines of an economic conference in the northern port city of Tianjin.

A spokesman for Industrial and Commercial Bank of China (ICBC) indicated last Friday that ICBC had opted out of the race by saying China Merchants Bank (CMB) was in exclusive talks to buy the Hong Kong lender.

Meanwhile, reports have said the central government did not want two State-run banks bidding for the same assets and asked not to pay more than 2.85 times book value for Wing Lung.

The Shanghai Securities News reported on Wednesday that CMB could pay 3.1 times book value for Wing Lung. The paper cited market talk in Hong Kong.

Asked about a price tag of 3.1 times book value, Smith said: "That's crazy. Why would you pay three times book for an institution like that?"

Smith said ANZ management had to ensure any deal for Wing Lung was struck at an acceptable price. "We have to make it work for our shareholders," he said.

A fair price for Wing Lung was closer to two times than three times its book value, Smith added. "I don't think it's a question of being outgunned. The issue is the size of the wallet," he said.

"For us, it's much more logical because it's a sort of stepping stone into China," he added.

ANZ last year bought a 19.9 percent stake in Shanghai Rural Commercial Bank. Smith also added that ANZ was also interested in a "start-up from fresh" such as a rural bank in Chongqing or Chengdu, the capital of quake-stricken Sichuan province.

He said ANZ was not being held back by regulations but rather by its internal foot-dragging. "We're not moving as fast as I would have liked. So I have got to kick a few people," said Smith, who took the helm at ANZ last year after heading HSBC's Asian operations.

Reuters

(HK Edition 05/30/2008 page2)