Chinatrust Financial Holding Co (中信金控), owner of the nation’s biggest credit card issuer, said yesterday it was mulling merger and acquisition opportunities with Chinese financial service providers to build a greater presence throughout the fast-growing Chinese market.
Paving the way for potential opportunities, Chinatrust’s board last month approved a proposal to extend the company’s capital to NT$150 billion (US$4.5 billion), up 50 percent from the current NT$100 billion.
“Potential investment opportunities in Chinese [banks], or vice versa, were factored in when we made the proposal,” company spokesman Daniel Wu (吳一揆) said at a press briefing yesterday. “We hope [an investment] would be a direct investment rather than made via a third destination.”
Chinatrust said it was still evaluating ways of raising new funds.
“If we decide to raise funds [by issuing new shares,] we would not rule out allowing Chinese companies to subscribe,” Wu said.
A number of Chinese banks, including financial heavyweights, have approached Chinatrust to buy a stake via investment banks, Wu said.
“We are optimistic and we will carefully study any investment [proposal] from Chinese banks,” he said.
Mergers and acquisitions are an important strategy for Chinatrust to rapidly build a stronger presence in China as it would take at least two years for its Chinese branches to get a license to help customers trade financial tools denominated in yuan, a business with big growth potential, Wu said.
Chinatrust, which has nearly 80 percent of its earnings from its bank subsidiary, Chinatrust Commercial Bank (中國信託商銀), is waiting for the governments on both sides of the Taiwan Strait to sign a memorandum of understanding (MOU) that would enhance financial cooperation and exchanges.
“We have been preparing to set up branches in China and we will immediately take action after the MOU is signed,” Wu said.
Chinatrust will be able to operate its Chinese units as early as next year if Taipei signs the MOU with Beijing by the end of next month as expected, he said. The procedure would take Chinatrust nine months, he added.
On April 30, Chinatrust reported NT$3.4 billion in net income for the first quarter, down 31 percent from NT$4.93 billion a year ago. However, that was more than double the NT$1.54 billion the company earned in the final quarter of last year.
Shares of Chinatrust jumped 6.76 percent to close at NT$19.75 yesterday, leading the gains in local financial stocks.
The benchmark TAIEX inched up 0.09 percent.
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