Hong Kong stock surge spurs block trade boom; China bank deals seen

 

HONG KONG, April 21 (Reuters) – A sharp rally in Hong Kong stocks has spawned 11 block trades worth $3.4 billion in April alone and bankers say a raft of similar deals is waiting in the wings, including Spanish lender BBVA’s stake in China’s CITIC Bank Corp.

In a welcome fee windfall for investment banks amid a lacklustre IPO market, demand for block share trades is so robust that fund managers who missed out on the recent surprise stock surge are taking the unusual step of actively seeking out deals.

“The sharp rally… has perked up block trade opportunities. We are definitely seeing that space a lot more active and are expecting that momentum to continue,” said Brian Gu, co-head of JPMorgan’s China investment banking.

With new Basel III rules making it disadvantageous for banks to hold minority stakes in other lenders, large chunks of shares in Chinese financial institutions are expected to change hands.

In addition to BBVA’s $2.6 billion stake in CITIC Bank , Hong Kong’s Hang Seng Bank Ltd is also expected to offload its $3.7 billion stake in China’s Industrial Bank Co Ltd, market sources said, declining to be identified as they were not authorised to speak on the matter.