HONG KONG, Feb 15 (Reuters) - Bank of East Asia Ltd , a family-run Hong Kong lender, rejected a call by activist investor Elliott Management Corp to put the bank up for sale, saying the challenging economic and business environment would bode ill for such a process.
Elliott, which owns a stake of about 7 percent in Bank of East Asia (BEA), earlier this month heaped pressure on the bank to sell itself, saying its executives had serially mismanaged the business, leading to weak performance and poor returns for minority shareholders.
BEA, which has a $7.6 billion market value and is one of the last remaining family-run banks in Hong Kong, said on Monday it would carry out a strategic review of its share register business Tricor Holdings Ltd, of which it owns about 76 percent. The rest of that business is owned by NWS Holdings.
BEA has hired Goldman Sachs to conduct the review, a person familiar with the matter told Reuters. The source was not authorised to speak to the media about the matter. Goldman Sachs was not available for an immediate comment.
"The management team and the board remain committed to maximising shareholder value and believe that the best way to achieve this in the current environment is to focus on execution and improving the bank's business," the company said in a statement to the Hong Kong stock exchange.
Elliott, which is known for battles against corporate boards, responded by saying BEA's "future business and operational initiatives are too little, too late".
"Enough is enough, and the board should now move forward by starting an auction process to explore the possibility of a sale of BEA," the statement added.
BEA also reported a 16.8 percent drop in its full-year net profit of HK$5.64 billion ($724.6 million).
BEA shares closed up 2.4 percent, while the benchmark Hang Seng share index finished 3.3 percent higher.
BEA counts Spain's CaixaBank and Japan's Sumitomo Mitsui Financial Group Inc as its other top shareholders.
($1 = 7.7840 Hong Kong dollars) (Reporting by Denny Thomas; Editing by Miral Fahmy and Susan Thomas)