UPDATE 1-Goldman hired to advise on Hong Kong's Wing Hang Bank sale -sources

* Deal would be the second for a Hong Kong bank this year

* Bidders include OCBC, Anbang Insurance, Agbank, Bank ofNova Scotia -sources

* Wing Hang shares rise 3.5 pct on sale progress

By Clare Jim and Saeed Azhar

Dec 4 (Reuters) - Goldman Sachs Group Inc has beenhired by the biggest shareholder of Wing Hang Bank Ltd to advise on the sale of the $4.5 billion Hong Kong lender whichpromises buyers a route into mainland China.

A sale would be the second this year for a family-owned HongKong lender after Chong Hing Bank Ltd, with suitorsattracted by the prospects of overseas expansion as well as thecity's rapidly growing offshore yuan fixed-income market.

The family of Chairman Patrick Fung as well as afamily-linked affiliate and Bank of New York Mellon Corp - which own a combined 45 percent of Wing Hang - said inSeptember they had received preliminary offers from thirdparties that they did not identify.

Suitors preparing to bid in mid-December include Singapore'sOversea-Chinese Banking Corp Ltd, China's AnbangInsurance Group and Agricultural Bank of China Ltd,and Canada's Bank of Nova Scotia, two people familiarwith the matter told Reuters.

Wing Hang expects a price equivalent to about twice its bookvalue, one of the people said, valuing the sale at just over $5billion. The bank's stock currently trades at 1.71 times itsbook value.

At $5 billion, the transaction would be the second-biggestfor an Asian bank this year, behind the $5.6 billion Japan'sMitsubishi UFJ Financial Group Inc paid for themajority of Thailand's Bank of Ayudhya PCL.

Wing Hang shares were up 3.5 percent on Wednesday afternoon,with the sign of progress in the sale process offering investorsencouragement. By comparison, Hong Kong's benchmark Hang Sengindex was down 0.6 percent.

BENCHMARK DEAL

In October, a trading arm of China's Guangzhou citygovernment agreed to buy three quarters of Chong Hing Bank forabout $1.5 billion, or a price-to-book ratio of 2.08 whichanalysts regard as a benchmark for future deals.

Shares of Hong Kong's family-run banks have recovered from aselloff after the financial crisis, encouraging owners toconsider selling. The index tracking the performance of HongKong financial institutions has more than doubled afterhitting a multi-year low in March 2008.

The small and mid-sized lenders operate in a challengingmarket dominated by HSBC Holdings PLC, StandardChartered PLC and Chinese banks. Competition has pushedtheir return on equity to 9 percent from about 20 percent in2001, according to Bank of America Merrill Lynch.

But financial institutions looking for a gateway intoChina's banking market may have to act quickly because there areonly three family-run banks left - including the biggest, Bankof East Asia Ltd, and smallest, Dah Sing FinancialHoldings Ltd - compared with at least six a decadeago.

Buying Wing Hang would give the successful bidder access tothe bank's 70-plus branches and offices in Hong Kong, Macau andmainland China, as well as a spring board from which to launchan offshore yuan business.

A Wing Hang spokeswoman declined to comment on the hiring ofGoldman, pointing to a statement the bank issued in Octobersaying shareholders were in talks with independent third partiesand that no agreements had been reached.

A Goldman spokesman in Hong Kong declined to comment. Bankof Nova Scotia and OCBC declined to comment, while Anbang andAgBank were not immediately available to comment.