SinoPac starts negotiations to offer yuan financing

SinoPac Holdings Co (建華金控), a Taiwanese lender with branches in Hong Kong and a partnership in Shanghai, is in talks with regulators to offer financing services to customers that operate businesses in China.

The lender wants to meet demand for cross-currency financing in US, Hong Kong and Taiwan dollars and Chinese yuan. It had planned to offer the so-called cross-pacific financing account product by the end of the month, though that will now likely be delayed, SinoPac spokesman Kevin Peng (彭康雄) said in Taipei.

"The product is ready," Peng said. "Now we need to negotiate with the governments on both sides because it involves foreign currency restrictions."

The Financial Times reported earlier SinoPac had planned to offer the new product this month.

Taiwanese companies invested US$2 billion in China in the first half, a 31 percent rise from the same period a year ago, according to figures from the Investment Commission under the Ministry of Economic Affairs. Being able to sell the new financing product may boost SinoPac's business.

Taiwan recently allowed nine banks, including SinoPac's banking unit, Bank SinoPac (建華銀行), to offer trading in yuan derivatives, to help companies hedge foreign exchange risks.

The government bars banks from offering yuan-denominated loans. Still, lenders such as SinoPac and Fubon Financial Holding Co (富邦金控) are seeking partners or acquisitions in Hong Kong and China to tap demand for financing.

SinoPac's banking unit in Hong Kong won a full banking license last year, after Shanghai-based partner, First Sino Bank, received approval to provide Chinese yuan banking services.

SinoPac's US unit, Far East National Bank, also has a representative office in Beijing.

Last month, Taiwan allowed non-deliverable forward contracts between the yuan and the dollar.