Fubon Financial Holding Co (富邦金控), the nation’s second-largest financial services provider by assets, aims to boost its presence in China, using its banking branch in Hong Kong as a bargaining chip, company president Victor Kung (龔天行) said yesterday.
The group, which already owns a 20 percent stake in China’s Xiamen City Commercial Bank (廈門商銀), said it is also in strategic partnership talks to push its service network beyond the southeastern coastal province of Fujian.
“Our ambition in China goes beyond owning shares in Xiamen Bank,” Kung told an investors’ conference.
The most profitable financial conglomerate in Taiwan is mulling trading shares in its Hong Kong banking branch for easier and quicker access to the Chinese market, Kung said.
Toward that end, Fubon Financial in May tapped veteran banker Raymond Lee to head Fubon Bank in Hong Kong, which reported an increase of 17 percent year-on-year in first-half net profit to HK$200 million (US$25.8 million). Lee has more than 30 years of international banking experience at home and overseas, including yuan settlement and clearing businesses, Kung said.
“We deem the Hong Kong branch as a valuable asset and plan to use it as a bargaining chip to trade partnerships that would allow us to further tap into the Chinese market,” Kung said.
He added that branch has been actively pursued by Chinese financial institutions intent on gaining a foothold in the special administrative region.
In addition, Fubon Financial is in talks with a Chinese city-level lender for potential joint ventures through share investment or other channels, Kung said. He refused to name potential partners in either case.
Fubon Financial may benefit from an extra NT$8.46 billion (US$282.43 million) in cash dividends this year, after booking NT$691 million in the first half, company data showed.
With the eurozone mired in fiscal debt problems, the group intends to cut its hold-to-maturity portfolio and boost available-for-sale positions, adjustments that could boost the overall net worth by about NT$25 billion, Kung said.
The upcoming currency settlement agreement, likely to be signed next week with China, is a prerequisite, but not enough to make Taiwan a yuan offshore banking hub like Hong Kong, Kung said.
Authorities must also set up a real-time direct yuan clearing mechanism with China, he urged.
Kung confirmed tighter profitability stress ahead, as the Financial Supervisory Commission intends to raise general provision requirements to 1 percent next year, from the current 0.5 percent. The group’s loan provision stands at 0.6 percent, he said.