The Asian bank is reviewing its business operations, while a major shareholder activist that had instigated legal action and sought to restructure the bank, said it supports the lender's action.

Hong Kong-based Bank of East Asia, yesterday announced that it will conduct a “comprehensive review of business and assets” so that it can boost shareholder value. Elliott Management Corporation, the activist investor that has harried the bank over poor performance, said it backed the review and had paused legal proceedings against BEA.

BEA, which provides private banking as part of its services, said the review “will focus on the identification of potential strategic transactions which would enhance the value of the bank’s existing businesses and assets, as well as strategic alternatives for potentially non-core assets”.

The lender did not elaborate on what business areas might be affected. BEA said it will reveal an update on its review by 30 June this year. 

In September 2016, Elliott sued the bank, claiming it unfairly treated shareholders when BEA placed shares in two separate deals with Japan’s Sumitomo and Spain’s CaixaBank in March 2015 and January 2016. 

However, in a turn of events, yesterday BEA said that Elliott supported its strategic review announcement. 

BEA has engaged Goldman Sachs as its financial advisor in connection with the review.

“Assessing the strategic fit and value of constituent assets in the Bank’s portfolio is an important initiative to improve our capital efficiency and drive shareholder value,” Adrian and Brian Li, co-chief executives for the bank, said. 

The review is also a sign of how new C-suite leadership at BEA has triggered changes. In May last year David K P Li stepped down as CEO, taking up the post of executive chairman. The CEO slot was split between Adrian and Brian Li. 

“Elliott supports the announcement today by BEA that it will undertake a comprehensive strategic review,” Jonathan Pollock, co-CEO and chief investment officer of Elliott, said. “BEA has built a strong and valuable franchise in Hong Kong and the mainland and we believe this step will lead to significant value creation. We look forward to continuing a dialogue with management and the board about opportunities to increase shareholder value.”

Elliott said it will also apply to pause court proceedings that it previously started against the bank and certain former and serving bank directors.