Fubon denies deal with Xiamen bank

Fubon Financial Holding Co (富邦金控), which has been aggressively seeking to expand across the Taiwan Strait, denied reports yesterday that the company had struck a preliminary investment agreement with its Chinese rival Xiamen City Commercial Bank (廈門市商銀).

"Fubon Financial will comply with Taiwan's regulations and will not invest in any ... Chinese financial institutions without the approval of the authorities," the company said in a statement released yesterday.

Victor Kung (龔天行), spokesman for Taiwan's sixth-largest financial group by assets, refused to comment.

Hong Kong's Wen Wei Po reported yesterday that Fubon Financial had signed a preliminary investment agreement to buy no more than a 20 percent stake in Xiamen City Commercial for 500 million yuan (US$62 million).

The Chinese bank operates 31 branches across the country, with assets amounting to 8.73 billion yuan.

The Chinese financial institution is no stranger to partnerships with its Taiwanese counterparts, having signed a business cooperation agreement with the International Bank of Taipei (台北國際商銀) in 2002, the report said.

Forum

Last week, Fubon Financial Chairman Daniel Tsai (蔡明忠) attended a forum in Xiamen and met with Fujian Governor Huang Xiaojing (黃小晶), sparking market speculation that the company may have made progress in investment talks.

Fubon Financial has been seeking to break into China's financial sector, as the country is slated to open its market to foreign banks by the end of this year as part of the preconditions set for its accession to the WTO.

With NT$12 billion (US$364 million) at its disposal for acquisitions, the company said last month it was in talks with up to five Chinese rivals and expected a breakthrough by the year end. The outcome, however, remains contingent on regulatory approval, the bank said.

The Financial Supervisory Commission said it had no knowledge of the rumored investment deal, adding that it would ask the company to elaborate.

Outlook gloomy

The outlook for the company's plan appeared gloomy, however, as newly appointed commission chairman Shih Jun-ji (施俊吉) said last month that the thawing of cross-strait economic relations was in the realm of "national policy" and not the remit of the regulators.

At present, the government still bans Taiwanese banks from investing in the China market. It nevertheless has allowed 10 banks to set up representative offices in China to collect valuable market information.

The proposed relaxation was included in the "other opinions" category at the Conference on Sustaining Taiwan's Economic Development in July, leaving it to the government to decide on the issue.