Minister of Finance Chang Sheng-ford (張盛和) said yesterday he could not rule out that Chinese banks might buy shares and become board members of some state-run banks in which the government does not hold a 100 percent stake, but added the ministry would do its best to maintain its right to manage the banks and retain its majority stake.
Chang’s remark came after an announcement by SinoPac Financial Holdings Co (永豐金控) on Tuesday that it plans to sign an agreement with the Industrial and Commercial Bank of China Ltd (ICBC, 中國工商銀行) which would allow the Chinese lender to acquire a 20 percent stake in the Taiwanese company’s banking subsidiary, Bank SinoPac (永豐銀行).
SinoPac’s private placement came after the governments on both sides of the Taiwan Strait agreed on Monday to further ease investment caps in each other’s financial institutions to allow greater market access.
Under the relaxed rules, Chinese lenders are allowed to buy up to 10 percent of a listed Taiwanese financial holding company, up to 15 percent of an unlisted financial holding company and 20 percent of a banking subsidiary of a listed Taiwanese financial holding company.
However, the relaxed rules have caused some lawmakers to worry about the government’s stakes in state-owned and state-run banks.
At a meeting of the Finance Committee at the legislature in Taipei yesterday, Chang reiterated that the government would not sell stakes in wholly-owned state banks to Chinese firms.
However, for state-run banks in which the government does not hold 100 percent stake, such as Chang Hwa Commercial Bank (彰化銀行), Hua Nan Commercial Bank (華南銀行) and First Commercial Bank (第一銀行), the government would try to maintain its leading position in the banks’ management, he said.
Nevertheless, Chang said he would support state-run banks expanding their branch and office networks in China to increase their market share and competitiveness.
The SinoPac deal, which needs regulatory approval from both sides of the Taiwan Strait, is likely to become the first ever investment in a Taiwanese bank by a Chinese lender. It is valued at about NT$20 billion (US$668 million), SinoPac Financial spokesman Michael Chang (張晉源) said at an investors’ conference late on Tuesday night.
The company is targeting completing the deal by the end of the year, Michael Chang said.
Credit Suisse said yesterday that SinoPac’s strategic alliance with ICBC would help Bank SinoPac — a medium-sized lender with US$300 million in annual profits — build up its operations in China, as well as its yuan-denominated business in Taiwan.
“The breakthrough with ICBC is significant for the bank’s longer-term development,” Credit Suisse analysts Chung Hsu (許忠維) and Michelle Chou (周盈秀) said in a note yesterday.
SinoPac Financial shares closed up 2.8 percent at NT$14.7 yesterday, retreating from as high as NT$15.3 in opening trade, Taiwan Stock Exchange data showed.
So far this year, the shares have risen 18.07 percent, compared with the TAIEX's 3.15 percent increase over the same period.
However, Credit Suisse maintained a "neutral" rating on SinoPac Financial shares. "In the near term, the stock price appears to be fairly valued based on the operational outlook this year and synergies with ICBC are likely to take two to three years to materialize, assuming it is approved by the end of the year," Hsu and Chou said in the note.
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