Hong Kong approves bank giant

The Bank of China building dominates the Hong Kong skyline

HONG KONG, China -- Hong Kong will likely get a new banking giant this year, after the Bank of China said it would consolidate its 10 sister banks.

The merger would be the largest consolidation in Hong Kong's history, according to the South China Morning Post.

Bank of China is thought to be readying a $5 billion initial public offering, with joint listings in Hong Kong and the United States.

The streamlining helps it prepare for the offering, expected in 2002.

A new back office

Hong Kong legislators on Thursday paved the way by passing a law allowing the tieup. The new entity would rival HSBC Holdings' Hong Kong operations in size.

The change lets the bank streamline its back-office operations. The Bank of China agreed to buy the Olympian Tower to house them. It paid Hong Kong's subway operator, the MTR Corp., $140 million for the 26-story office.

Bank of China plans to combine the operations of the Bank of China's Hong Kong branch into its Po Sang Bank entity. It will then change its name to the Bank of China (Hong Kong.)

The bill also lets the bank include seven banks based in mainland China and another Hong Kong-based entity.

The rollup will also include its Nanyang Commercial Bank and Chiyu Banking Corp., though legally they will stay separate subsidiaries.

Bank of China officials have said they want to wrap up the consolidation this year.

Hong Kong legislators said they felt allowing such mergers helped Hong Kong keep its place as a world banking center.

Mainland authorities have also encouraged China's banks to streamline operations ahead of its entry into the World Trade Organization.