China Development gets OK for Macau investment

China Development Financial Holding Corp (中華開發金控) received approval from the government to invest as much as US$100 million in Finibanco (Macau) SA, a purchase that may offer a way into the Chinese market when restrictions are lifted.

China Development spokeswoman Debbie Tung (董孝穎) declined to comment after the government announcement of its approval for the Macau bid. The company has said it plans to acquire at least 51 percent of a lender in the former Portuguese colony. China Development Vice President Grace Fang (方鳳山) in February said the bank set a US$100 million investment limit for the first two years.

China Development, formed in December 2001, is one of the largest financial holding companies in the nation in terms of net worth. At the end of 2001, its total net worth stood at NT$134.5 billion (US$3.8 billion) and its total assets amounted to NT$201.4 billion (US$5.8 billion), according to statistics provided by the Taiwan Ratings Corp (中華信評).

The government doesn't allow financial companies to set up branches in China, its political rival. Finibanco, part of Portuguese lender Finibanco SA, operates one office in Macau. There are 23 banks in Macau, according to the Monetary Authority of Macau's Web site.

"Macau is after all, part of China, and through this, China Development will be able to tap China's potential in the future," said Lin Kuan-ho, who helps manage NT$1.6 billion in equities at First Global Investment Trust Co (元大證券投信). Lin's funds don't own China Development shares. "In fact, everybody wishes to invest directly in the mainland banks, though Taiwanese banks have no choice but to seek alternatives."

China resumed sovereignty over Macau in 1999, though the territory will retain some autonomy for 50 years. It is located about 80km from Hong Kong.

China Development yesterday received a "BBB+" counterparty credit rating with a stable outlook from Standard & Poor's, two notches above the lowest investment grade. Its unit, China Development Industrial Bank (中華開發銀行), had its rating cut to "A-" from "A."