Print

Mail

wiki links

Fubon's plan to invest in PRC bank approved

The Financial Supervisory Commission (FSC) yesterday gave its go-ahead to Fubon Financial Holding Co's (富邦金控) application to indirectly invest in a Chinese bank. Fubon Financial's Hong Kong-based subsidiary Fubon Bank (Hong Kong) Ltd, formerly known as the International Bank of Asia (港基銀行), will soon be allowed to take up a 19.99 percent stake in Fujian, China-based Xiamen City Commercial Bank (廈門市商銀) for US$34 million, or US$0.68 per share, FSC Vice Chairwoman Susan Chang (張秀蓮) told a press conference yesterday.

“[Fubon Financial] is the first domestic bank to have been granted permission to take a stake in a Chinese bank through an offshore subsidiary to enhance its international competitiveness while serving China-based Taiwanese businesspeople,” Chang said.

next step

Fubon Financial's China-bound investment, however, has yet to be approved by the Investment Commission of the Ministry of Economic Affairs, she said.

After becoming the Xiamen City Commercial Bank's second-largest shareholder, Fubon Bank (Hong Kong) will be able to secure one-fifth, or two seats, of the 11 seats at the Chinese bank's board, as well as the right to nominate its president, the commission said.

Xiamen Municipal Bureau of Finance is the city commercial bank's biggest shareholder with a 24 percent stake and the right to nominate the bank's chairman.

Fubon Financial estimates that its Chinese investments would be a profit-maker three years after finalizing the deal, Chang said.

Xiamen City Commercial Bank's 34 outlets have a total capital of 250 million yuan (US$57.8 million), with a net worth of 430 million yuan and a net income of 83 million yuan last year.

Chang said that the commission gave its approval because Fubon Financial's Hong Kong-based bank met its newly revised criteria allowing offshore subsidiaries of domestic banks with between US$6 billion and US$10 billion in assets to acquire up to 20 percent of a Chinese bank.

As of last year, Fubon Bank (Hong Kong) had US$7.78 billion in total assets and a higher-than-average Bank for International Settlements ratio of 14.42 percent. It reported no major irregularities within the last three years, conforming with the Regulations Governing Approvals of Banks to Engage in Financial Activities Between the Taiwan Area and the Mainland Area (臺灣地區與大陸地區金融業務往來許可辦法), she said.

The relaxation came amid speculation that banking regulators in Taiwan and China had recently agreed in principle that the Hong Kong Monetary Authority would act as the intermediary to help supervise Taiwanese banks' investment in Chinese lenders through their Hong Kong subsidiaries.

Upon learning of the commission's approval, Fubon Financial president Victor Kung (龔天行), who was in a meeting, was quoted by his public relations officer as saying that the bank “looks forward to facilitating the deal.”