China caps state banks' bids for Wing Lung

The Chinese government has imposed a limit on what Industrial and Commercial Bank of China and China Merchants Bank can pay for Hong Kong’s Wing Lung Bank, Bloomberg reported. The two state-owned banks, which are competing for control of Wing Lung, were asked not to pay more than 2.85 times book value for the 53% stake. Family-run Wing Lung had sought at least three times book value. It is unclear whether the offer prices will be calculated by Wing Lung’s book value as of March 31 or the end of 2007. The bank’s equity fell 6.5% in the first quarter to US$1.5 billion. A Hong Kong-based analyst called the move "unheard of" and said it may send a "quite negative message to the market."