Allowing the Chinese conglomerate CITIC Group (中國中信集團) to purchase a stake in CTBC Financial Holding Co (中信金控) would set a precedent enabling Chinese firms to enter the nation’s financial sector, civic group members said yesterday, calling for the Ministry of Economic Affairs’ Investment Commission to reject the bid.
Under the terms of the deal, CTBC is to give a 3.8 percent stake to CITIC in return for full control of one of the Chinese firm’s affiliate banks, including the affiliate’s several branches in China.
“The deal would be the first of its kind to open the door to allow Chinese investors to acquire stakes [in Taiwanese banks], even if the door is only opened a crack,” Economic Democracy Union executive secretary Chen Guan-yu (陳冠宇) said.
Because of CTBC’s dispersed shareholder base, the stake would give CITIC an outsized influence, including the right to name board directors, Chen said, adding that it would also potentially give CITIC access to credit card information of Taiwanese consumers.
Union convener Lai Chung-chiang (賴中強) said that CITIC’s status as a state-controlled “red capital” corporation raised concerns over how it would use its influence if allowed to invest in the financial sector.
As a corporation controlled by China’s State Council, much of CITIC’s leadership was closely affiliated with the Chinese Communist Party, Lai said, adding that company affiliates had used advertising revenue in an attempt to force Hong Kong’s media to toe Beijing’s line.
Democracy Tautin representative Tsai Ming-ying (蔡明穎) said that if the deal was approved, CITIC could potentially use its sway to influence the process by which loans are given by CTBC to put pressure on Taiwanese companies.
Chen Li-fu (陳俐甫), a professor at Aletheia University and a board director of the Taiwan Association of University Professors, said that because of the controversial nature of the deal, approval should be put on hold to allow the incoming administration of Democratic Progressive Party president-elect Tsai Ing-wen (蔡英文) to make the final call.
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