Overseas banks remain interested in buying local financial institutions as long as they can take full control of the acquisition targets, a veteran foreign banker said yesterday.
There are many moneyed Western banks interested in investing in local banks with a complete control of the targets, or at least a 51-percent stake, Rupert Robson, co-head of the global financial institutions group in corporate and investment banking at HSBC Bank Plc, said in Taipei yesterday.
Except non-bank financial institutions that seek strategic partnerships in order to get distribution channels, foreign banks have been less favorable toward minority shareholding, as they want to steer decision-making power and make their spending count under regulatory demand for meaningful capital use, he explained.
Robson made the remarks in a media gathering in which HSBC unveiled its newly established investment banking unit in Taiwan. The bank wants to tap into the nation's robust capital market, which will offer local companies advisory services in merger and acquisition (M&A) deals and overseas fundraising activities.
The banker's comments could explain the lack of succesful M&As, while the nation's government has vowed to consolidate the crowded banking sector, with one of the aims being to have at least one local bank run by an overseas firm.
In comparison, foreign banks have been racing to buy Chinese banks in order to strengthen their footholds there, before the full opening of the country's finance market for foreign participation at the end of next year. Each foreign bank is limited to a maximum 20-percent stake in one Chinese lender.
Thus far, deals reached in the Chinese banking sector include the Bank of America's acquisition of a 9 percent stake in China's second largest lender, China Construction Bank (中國建設銀行), for US$3 billion in June. HSBC was the financial adviser for the bank, the US' second biggest lender, in the deal.
As the attraction to other markets grows, the banking sector could become less appealing to overseas banks interested in expanding in the region, said Wellington Chow (
Chow expected less active M&A activities in the nation's banking sector next year, following the conclusion of state bank mergers at the year's end, due to a lack of strong incentives for private financial holding firms to consolidate.
Meanwhile, local lenders are expected to have strong needs for fundraising to improve their capital adequacy next year, to meet stricter requirements for risk management under the Basel II standards, he said.
HSBC is focusing on large-scale clients in the high-tech, finance and manufacturing sectors, hoping to double the unit's revenue next year, Chow said.
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