China mainland "open" to Taiwan banks

14 March 2008

The mainland is "open" to Taiwan banks investing in their mainland peers, the banking regulator said Wednesday.

 

"For us, there is no problem," Xia Lingwu, spokesman for the China Banking Regulatory Commission (CBRC), said. He was responding to yesterday's media report that Taiwan said its banks will be allowed to invest in their mainland counterparts via offshore subsidiaries, though no timetable was given.

 

"We haven't placed any hurdles in the way of Taiwan banks we treat overseas investors equally, be they from Taiwan, Hong Kong, Macao or the US," Xia said. "It's all about when the Taiwan side will lift its restrictions."

 

Xia's comments came a few days after CBRC Chairman Liu Mingkang said it encouraged financial institutions from Taiwan to invest on the mainland.

 

An overseas bank can now acquire a stake of no more than 20 percent in a mainland lender and it is allowed to set up branches and be incorporated locally. But Taiwan authorities currently prohibit lenders from investing in mainland banks.

 

Fubon Bank (Hong Kong), a potential beneficiary of the deregulation, said yesterday that it welcomed the policy.

 

The Hong Kong-listed unit of Taiwan's Fubon Financial Holdings is rumored to be the first Taiwan-backed lender to seek a stake in a mainland bank. Earlier reports said it was in talks to buy a 20 percent stake in Xiamen City Commercial Bank.

 

But a Fubon spokesperson refused to comment directly, only saying it is actively seeking to buy stakes in its mainland peers.

 

The bank - which reported a 41 percent jump in its 2007 net profits to 460 million U.S. dollars - said on Tuesday it is keen to expand in the mainland market with its status as a Hong Kong- registered company.

 

A Hong Kong-based analyst said deregulation will benefit Taiwan lenders struggling for a share of Taiwan's crowded marketplace.

 

"Now a much bigger and fast-growing market is beckoning," the analyst, who did not wish to be named, said. "No one wants to miss out on the mainland market."

 

Taiwan banks, relatively smaller than their US and European rivals, have advantages in the mainland market, the analyst said.

 

"As regional players, they could suit small and medium-sized businesses - those from the island," he said.

 

Taiwanese companies have invested more than 100 billion U.S. dollars on the mainland, which is the island's top trading partner.

 

 

Source: Xinhua

© Graham Bishop