Cathay United’s board approves Shanghai plans

GREEN LIGHT::The bank plans to inject 1 billion yuan in new capital to its branch in the city to expand yuan-based business, and try to establish an FTZ outlet

By Kevin Chen  /  Staff reporter

Wed, Oct 30, 2013 - Page 13

Cathay United Bank (國泰世華銀行) yesterday said its board approved plans to recapitalize the bank’s branch in Shanghai, China, and set up a new outlet in the Shanghai free-trade zone (FTZ).

If Chinese authorities grant permission to the lender’s application to set up an outlet in the newly established free-trade zone, Cathay United Bank would become the first Taiwanese financial firm in that experimental area, as it eyes the potential development of cross-border yuan flows.

In a filing to the Taiwan Stock Exchange, Cathay United, a subsidiary of Cathay Financial Holding Co (國泰金控), said it plans to inject new capital of 1 billion yuan (US$160 million) into its Shanghai branch, which currently has a working capital of 1 billion yuan.

The Shanghai branch, which started operations in 2010, will use the new funds to expand its yuan-based businesses and open new outlets there, Cathay United said.

The lender also expects an outlet in the zone to help increase its brand awareness in China, while targeting the zone to help further penetrate the Chinese market and engage in more yuan-based businesses.

Cathay United generated NT$1.41 billion (US$48 million) net profit last month on the back of low funding costs and a healthy fee income.

During the first nine months of the year, the lender earned a total of NT$11.76 billion, up 13.5 percent year-on-year, according to data compiled by Cathay Financial.

Cathay Financial, the nation’s largest financial service provider by assets, reported net income of NT$26.7 billion during the first nine months, or earnings per share of NT$2.32.