Fubon Financial expands into HK with eye on China

Fubon Financial Holding Co (富邦金控), the nation's second-largest financial services group by market value, formally expanded into Asia's primary financial hub by inaugurating Fubon Bank (Hong Kong) Ltd yesterday, making it the nation's first financial firm to operate in China.

The 33-branch Fubon Bank (Hong Kong), established in a merger between Fubon Financial and Hong Kong's International Bank of Asia (港基銀行) in February last year, plans to open its first office in Dongguan, Guangdong Province, by the year-end. Its target clients are the numerous Taiwanese and Hong Kong businesspeople there.

Fubon Financial offered HK$3.68 per share to acquire the bank, making the merger a HK$4.31 billion (US$550 million) deal.

Under the terms of the Closer Economic Partnership Arrangement (CEPA) between Hong Kong and China, the bank expects to upgrade its Dongguan office to a branch in two years and start conducting business across the Taiwan Strait.

At the opening ceremony yesterday, Fubon Bank (Hong Kong) chairman Richard Tsai (蔡明興) said securing a stronghold in Hong Kong marks the first step of Fubon Group's internalization.

He said the company is confident of giving shareholders around 15 percent return in the medium term.

Lee Jin-yi (李晉頤), the bank's managing director and chief executive officer, said Fubon Bank (Hong Kong) will help build a platform where Fubon Financial will be able to devise and develop financial products for the Asia-Pacific region.

"We'll be able to integrate resources between Taiwan and Hong Kong to better serve our customers," Lee told Taipei Times in a phone interview yesterday.

Although the bank currently has a 2 percent market share in Hong Kong, Lee said that with assistance from Fubon Financial, the bank's potential is huge.

Shares of Fubon Bank (Hong Kong) edged up HK$0.10 to close at HK$3.25 on the Hong Kong Exchange and Clearing Ltd yesterday.

Restricted by financial regulations, Taiwanese banking institutions can only set up representative offices in China.

Large banking entities such as Chinatrust Commercial Bank (中國信託), Land Bank of Taiwan (土地銀行), Taiwan Cooperative Bank (合作金庫) and First Commercial Bank (第一銀行) have offices across the Taiwan Strait.

"Fubon Financial has taken a slight lead against its rivals and this move will help give its brand name international exposure," said Wang Chien-ming (王建民), an analyst at Capital Securities Co (群益證券).

"But how much benefit it can garner through this merger will only be known after its first branch is established," he said.