Fubon Financial Holding Co (富邦金控), the nation's fourth-biggest financial group by assets, could buy stakes in Chinese banks as one of its plans to expand its banking business across the Taiwan Strait, a company executive said yesterday.
"We are thinking about possibly investing in Chinese banks through our Hong Kong subsidiary ? in order to better serve our clients," Fubon Financial spokesman Victor Kung (龔天行) said in a phone interview yesterday.
Other alternatives include setting up banking representative offices in China to tap into the market, Kung said.
The industry veteran remained tight-lipped about the possible plans, saying that there are no ongoing talks with potential targets for partnership and no timetable for the time being.
Kung made the confirmation after the Chinese-language press reported that Fubon Financial is planning to buy stakes in smaller, city-based banks of China through Fubon Bank (Hong Kong) Ltd, in which the financial holding firm controls 75 percent stakes, to enter the fast-growing Chinese market.
Since the proportion of foreign holdings in Chinese banks is limited to 20 percent, the purchase of stakes would cost Fubon Financial about NT$1 billion (US$29.7 million) at the most, the report said.
International banks have been racing to buy Chinese banks in droves in a bid to strengthen their footholds in the vast and fast-developing economy before a full opening-up of the finance market for foreign participation by the end of next year.
Examples include BNP Paribas, which announced last month that it was purchasing a 19.2 percent stake in the Nanjing City Commercial Bank for approximately US$87 million and, just a few days prior to that, the Asian Development Bank announced it was investing US$75 million, or the equivalent of less than a 1 percent stake, in the Bank of China, the country's largest bank.
China currently only allows Taiwanese lenders to set up representative offices and bans them from conducting loan business.
So far, the seven Taiwanese banks, including Cathay United Bank (國泰世華銀行) and Chinatrust Commercial Bank (中國信託商銀), that have established representative offices in China have not been allowed to upgrade into branches, due to a lack of reciprocal approval by the Taiwanese government for Chinese banks to open representative offices in Taiwan and the signing of a bilateral financial supervisory agreement.
In response, Financial Supervisory Commission Chairman Kong Jaw-sheng (龔照勝) said that they have not received Fubon Financial's application to invest in Chinese banks and the cross-strait investment would require approval from the Mainland Affairs Council.
Taiwanese companies' investment through their overseas subsidiaries is subject to review by the nation's authority governing cross-strait relations, according to regulations of the Statute Governing the Relations Between the People of the Taiwan Area and the Mainland Area (兩岸人民關係條例).
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