Wing Hang Bank Ltd (永亨銀行), Hong Kong's fourth-largest bank by market value, won approval from China's banking regulator to buy 5 percent of First Sino Bank (華一銀行), a Shanghai-based lender owned by China and Taiwan investors.
"Yes, we have approval from the government to sell a 5 percent stake to Wing Hang Bank," Pearl Zhang, a spokeswoman at First Sino, said in Shanghai.
Wing Hang is buying the shares from First Sino's biggest shareholder, Taiwan's Lotus World Wide (
"Having Wing Hang Bank as shareholder can enable us to get more funds for lending," Zhang said. "There's a huge number of Taiwan businessmen in the mainland. There's room for us to grow."
China is Taiwan's biggest export market and the most popular destination for the latter's offshore investment.
Taiwan companies account for more than 80 percent of First Sino's businesses. The unlisted bank has only a 20 percent market share in the banking businesses for Taiwan companies operating in China because of geographical restrictions.
First Sino was jointly set up in 1997 by Lotus World Wide, an investment arm of Taiwan's Pou Chen Co (
First Sino is considered a foreign bank and subject to the same business restrictions in China as HSBC Holdings Plc and Citigroup Inc. The lender is banned from conducting local currency-denominated businesses with individuals until 2006. Overseas investors can own as much as 25 percent of a Chinese lender, with a cap of 20 percent for a single overseas investor.
First Sino, which is headquartered in Shanghai's financial center of Pudong and has two sub-branches and two representative offices in the city, has applied to set up another branch in the southern provincial capital of Guangzhou, another hub for Taiwan businesses. Wing Hang has branches in Guangzhou and the nearby city of Shenzhen, both in Guangdong province.
Profit at First Sino almost tripled last year to 18.5 million yuan (US$2.2 million) from 6.9 million yuan, according to the bank. Assets totaled 3.8 billion yuan. The bank doesn't have any bad loans, Zhang said.
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