China Merchants Bank (CMB) has agreed to buy Hong Kong-based Wing Lung Bank for US$4.7 billion, the Wall Street Journal reported. The purchase would be the second-largest ever by a Chinese bank after Industrial and Commerical Bank of China (ICBC) bought a stake in South Africa’s Standard Bank last year. CMB, China’s sixth-largest bank by assets, is not expected to issue new shares to fund the acquisition, but will instead use a combination of cash, debt and earnings. CMB’s bid beat out attempts by ICBC and Australia & New Zealand Banking Group, and will help the mainland lender expand rapidly in Hong Kong. Last week, China’s government imposed caps on mainland lenders’ bids for Wing Lung bank, asking them not to pay more than 2.85 times book value for the 53% stake. However, the US$4.7 billion offer is equivalent to 2.9 times Wing Lung’s audited book value at the end of 2007.