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BOEA deal targets Islamic banking

Bank of East Asia (BOEA) is to target growth in the Islamic banking market by increasing its shareholding in Affin Holdings Bhd of Malaysia to 25 per cent.

The third-biggest publicly traded bank in Hong Kong will pay $238 billion for existing and new shares to boost its stake from the four per cent holding it currently owns.

According to a statement from the Affin, under the terms of the deal BOEA will pay either 1.3 times net asset value or the par value per share, depending on which is higher.

Commenting on the developments Warren Bright told Bloomberg that the move "seems to be directed at Islamic banking" in the Malaysian market that is anticipated to grow by six per cent over 2007.

Regulatory authorities in Hong Kong, Malaysia and shareholders in the two companies must now approve the deal prior to it going through.