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China, Taiwan escalate verbal barrage over CSFB

"Taiwan regrets China's attitude toward CSFB for holding the roadshow, in which we were simply trying to provide first hand information to investors." Minister of Finance Yen Ching-chang PHOTO: AP

Credit Suisse First Boston (CSFB) has found itself caught in the middle of cross-strait bickering after inviting Taiwan officials to Europe.

China's top securities regulator accused CSFB of "political misconduct" for sponsoring an investment tour of Europe that included Taiwan government officials. In Taiwan, Minister of Finance Yen Ching-chang (顏慶章) lashed out at China, which punished the Swiss-owned bank by ejecting it from a US$10 billion share sale.

CSFB, responding to China's tongue-lashing, said top executives will work hard to mend fences with Beijing. The lesson: Foreign banks aiming to help Chinese companies sell US$35 billion of shares during the next two years must keep Chinese politics in mind when doing business across the Taiwan Strait.

"The only people who will buck the trend are those who have nothing to lose and can afford to take the moral high ground," said Alan Thompson, an executive at Stern Stewart Pte, a Singapore risk-management consultant. "It's unlikely there will be many."

From Taiwan's point of view, the July trip aimed to introduce investors to the likes of Taiwan Semiconductor Manufacturing Co (台積電) and United Microelectronics Corp (聯電). Many of these firms have already sold shares overseas through foreign banks. To policymakers in Beijing, CSFB's decision to include the finance minister and the stock exchange chief gave tacit support to Taiwan's independence.

As a punishment, CSFB lost a role in a planned share sale by China Unicom Ltd, China's second-largest phone company.

"We must show some dissatisfaction" to banks that support Taiwan, Zhou Xiaochuan, head of the China Securities Regulatory Commission, told the Financial Times.

However, Yen reiterated the government's stance, saying that it is impossible to even consider talks with China until Beijing gives up its insistence that Taiwan first agree that there is only one China.

"Taiwan regrets China's attitude toward CSFB for holding the roadshow, in which we were simply trying to provide first-hand information to investors," Yen said. "China is combining everything with the so-called `one China' issue."
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