Handbook of Research on Family Business, Second Edition
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Handbook of Research on Family Business, Second Edition

Edited by Kosmas X. Smyrnios, Panikkos Z. Poutziouris and Sanjay Goel

During the previous decade, the multi-disciplinary field of family business has advanced significantly in terms of advances in theory, development of sophisticated empirical instruments, systematic measurement of family business activity, use of alternative research methodologies and deployment of robust tools of analysis. This second edition of the Handbook of Research on Family Business presents important research and conceptual developments across a broad range of topics. The contributors – notable researchers in the field – explore the frontiers of knowledge in family business entrepreneurship and stimulate critical thinking, enriching the repository of theoretical frameworks and methodologies.
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Chapter 13: Network capital and the rise of Chinese banks in Hong Kong: a case study on the Bank of East Asia Limited

Victor Zheng


On 23 September 2008, an ordinary working day, thousands of panicked depositors queued outside the various Hong Kong branches of the Bank of East Asia (hereafter, BEA) hoping to withdraw their savings due to rumour of a run on the bank. The triggering point was that the bank, which had just celebrated its 90th anniversary, had suffered a heavy loss on ‘certain equity derivatives’. Before that, due to repeated negative reports, the bank’s share price dropped from its highest level of HK$61.0 per share in 7 December 2007 to HK$22.0 by the middle of September 2008. As the Hong Kong SAR government took immediate measures to prevent the onset of financial instability, the rumour ultimately subsided. However, the ‘financial tsunami’ that swept the world shortly after the collapse of Lehman Brothers in October saw its share price plummet further to its lowest level of HK$13.2 in 28 October 2008. Worse still, in 11 November 2009, another situation greatly affected the bank and its controlling family – the David Li Kwok-po family. It was reported that the Guoco Group, a Hong Kong-listed Malaysian Chinese firm controlled by the Kuek Leng-chan family, had continuously absorbed BEA shares when their price was low. It further revealed that the Kuek has become the third-largest single shareholder of the bank. Speculation on a takeover grew up spontaneously (The South China Morning Post, various dates). Shares in the bank quickly changed hands and many stories about the two families appeared in the mass media.

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