A long running saga to wrestle control of the Bank of East Asia away from a Hong Kong family dynasty was ramped up this week. But the under fire Li family have been quick to hit back.
Billionaire Paul Singer’s $26 billion activist hedge fund, Elliott Management, which has a 7% stake in the Bank of East Asia (BEA) has gone on the front foot again.
Earlier this week the Financial Times (paywall) reported that US hedge fund Elliott Management said it had commenced legal proceedings against Hong Kong’s Bank of East Asia. The action seeks for a court to order BEA to release Spain’s Criteria Caixa and Japan’s Sumitomo Mitsui Banking Corporation from any contractual arrangements that are in favour of the bank.
Mismanagement Claims
The fund has for more than a year set its sights on the Bank of East Asia, one of Hong Kong's last remaining family-run banks, accusing the family and the board of mismanagement and improperly representing shareholder interests.
The Hong Kong headquartered bank though obviously thinks the best form of defence is attack and has quickly fired back at the accusations. In a press release the bank pulled no punches, coming out swinging and looking to land a few hard hits on what it clearly sees as a corporate raid from an unwelcome interloper.
Resist The Attack
“We will vigorously resist Elliott’s attack on the Bank and its Directors. Their actions are self-serving and calculated to distract the management team and Board who remain committed to maximising shareholder value. In today’s challenging operating environment, we continue to believe the best way to achieve that now is to focus on executing on our strategy,» said David K.P. Li, Chairman & Chief Executive of BEA.
Li continued, «We have heard Elliott’s arguments before and continue to believe that their bullying tactics only seek to serve their own short-term interests, and not the interests of the Bank’s shareholders as a whole.»
Clearly the short term winners in this spat are likely to be the Hong Kong litigation lawyers.
