The Financial Supervisory Commission yesterday approved Cathay Financial Holding Co’s (國泰金控) bid to fully acquire a Malaysian unit of the Bank of Nova Scotia (Scotiabank) for 1.1 billion ringgit (US$258.58 million).
The acquisition will be conducted through Cathay Financial’s subsidiaries, with Cathay Life Insurance Co (國泰人壽) and Cathay United Bank (國泰世華銀行) splitting the purchase at 49 percent and 51 percent respectively.
As the Scotiabank unit has a full-service banking license from Malaysian regulators, the deal would make Cathay Financial the first Taiwanese company to establish a foothold and tap into the nation’s ringgit-denominated businesses, Banking Bureau Deputy Director-General Lu Hui-jung (呂蕙容) said.
The Malaysian Scotiabank unit was established in 1994 and operates a branch in Kuala Lumpur, as well as two corporate banking offices in Johor Bahru and Penang, employing 71 people in total, Lu said.
“Net interest spread in Malaysia averages between 2.4 percent and 2.6 percent, which is higher than in Taiwan,” Lu said.
The unit specializes in providing trade financing services to Malaysia’s largest corporations and state-run enterprises, and its acquisition would allow Cathay Financial to serve the 1,750 Taiwanese businesses operating in the area, Lu said.
The bank reported revenue of about 87 million ringgit and net income of 21 million ringgit last year, while its assets tallied at 3.48 billion ringgit, data from the commission showed.
Malaysian regulators had tightened controls on the financial sector and the limits were not lifted until 2009 when nine bank licenses were granted to local companies, Lu said.
Taiwanese banks have a limited presence in Malaysia, apart from offshore banking units established by Cathay United Bank and Mega International Commercial Bank (兆豐銀行), which are barred from operating ringgit-denominated services, she added.
About 30 percent of Malaysia’s financial sector adhere to Islamic finance rules, which means any financing and banking operation must abide by Shariah, she said.
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