Fubon Financial in talks to buy stake in Guilin Bank

By Crystal Hsu  /  Staff reporter

Sat, Mar 09, 2013 - Page 13

Fubon Financial Holding Co (富邦金控) aims to deepen its foothold in Greater China this year as it is poised to become the first Taiwanese banking group with subsidiaries in Taiwan, Hong Kong and China.

The nation’s second-largest financial services provider by assets is in talks to purchase a significant stake in Guilin Bank (桂林銀行), after inking a deal in December to buy 80 percent of Shanghai-based First Sino Bank (華一銀行), Fubon Financial president Victor Kung (龔天行) said.

“Rumors about our investment plans in Guilin Bank are true,” Kung told an investors’ conference in Taipei.

The company will reveal the details after the negotiations bear fruit, Kung said, adding that the Chinese bank might reach a decision after banking authorities meet in Taipei later this month.

Fubon Financial reportedly intends to buy an 18 percent stake in Guilin Bank via Xiamen City Commercial Bank (廈門商銀).

Should regulators give the nod, Fubon Financial would become the fifth international banking group to have subsidiaries in Greater China after Citibank, HSBC, DBS and Standard Chartered Bank, Kung said.

“[This] will help boost cross-selling efficiency and bring in new business opportunities,” he said.

The benefits are already emerging and may grow more evident after the integration is set in motion, Kung said, adding that the company expects to win approval in the second or third quarter.

Fubon Financial reported strong profit growth in the first two months of the year, an increase of 47 percent year-on-year to NT$7.19 billion (US$241.87 million), or earnings per share of NT$0.75, company data showed.

However, the company was cautious about prospects for this year.

“While the economy at home and abroad is improving, we believe the pace of recovery is mild at best,” Kung said.

Taipei Fubon Commercial Bank Co (台北富邦銀行) is forecasting 5 percent growth in overall lending this year, with net interest margin likely to edge up 3 to 5 basis points.

The lender needs to set aside an extra NT$3.7 billion in general provisions to meet stricter requirements. It has yet to set a provisioning timetable, Kung said.

Meanwhile, Fubon Life Assurance Co (富邦人壽) expects first year premiums to hold steady this year, compared with last year’s NT$249.74 billion.

The insurer is seeking regulatory approval to book unrealized property gains, but the amount is not expected to be big given its modest real-estate investments when compared with Cathay Financial Holding Co (國泰金控) or Shin Kong Financial Holding Co (新光金控), Kung said.

Fubon Life plans to hire 6,000 new agents this year to strengthen sales of protection-type policies, said Chao Tsai-ling (董采苓), an executive vice president at the life insurer.

Fubon shares rose 4.88 percent to NT$43 yesterday, outpacing the TAIEX’s 0.69 percent gain.