HSBC buys a controlling stake in China Securities

HSBC Holdings Plc (匯豐集團), Europe's biggest bank, has bought a controlling stake in China Securities Investment Trust Corp (中華投信), Taiwan's largest fund manager, underscoring a growing international interest in the domestic fund management industry.

HSBC said it will pay US$103 million in cash to acquire a 53 percent stake currently owned by China Development Industrial Bank (中華開發工銀), the largest shareholder of the fund management firm.

HSBC, which said it also wants to buy the remaining stake from minority shareholders and employees, values the company at around US$200 million. Employees own nearly 21 percent of the company.

"The acquisition also complements the HSBC Group's growing wealth management business in Taiwan," HSBC Chairman John Bond said in a statement. "The long-term prospects for Taiwan's economy, asset management industry and personal banking business are bright."

Established in 1986, China Securities Investment Trust has nearly US$3 billion in assets under management and approximately 88,000 retail and institutional clients as of the end of March.

The acquisition will be paid for in cash, company officials said.

HSBC, one of the world's largest financial institutions, is the latest in a string of international financial giants eyeing Taiwan's asset management industry in the lead up to WTO entry.

Britain's Prudential has bought Core Pacific Securities and Investment Trust Co (京華證券) while US-based Prudential has bought a controlling stake in Masterlink Investment Trust Co (元富投信). The two Prudentials are not related.

Earlier this year, Deutsche Asset Management, a fund management unit of Deutsche Bank, formed a joint venture with Chinatrust Commercial Bank (中信商銀) to set up an asset management company in Taiwan.

China Securities Investment Trust offers 17 domestic,international, fixed-income and balanced funds.

J.P. Morgan Chase & Co is advising China Development Industrial Bank on the sale.

The deal is subject to regulatory approval.