TAIPEI: Fubon Financial Holding Co, Taiwan's second-largest publicly traded financial-services company, plans to increase its stake in the mainland's Xiamen City Commercial Bank after a cross-Straits accord on financial services is signed.
"We plan to increase our stake in Xiamen Bank after regulations are changed," Victor Kung, president of Fubon Financial, said by telephone yesterday. He declined to say how much of a stake Fubon Financial would buy. Under existing mainland rules, a single overseas investor can hold as much as 20 percent of a mainland lender.
Taiwan and the mainland are poised to sign agreements allowing more investments in each other's banking institutions, insurance and securities industries. Agreement on a broad framework for cooperation between the two was reached on April 26 in the third round of cross-Straits talks.
Fubon Financial in November gained the mainland's approval for the Taiwanese company's Hong Kong unit to buy a 19.99 percent stake in Xiamen Bank.
The company issued a profits warning in late October last year saying it expected its second half to be hit severely by the global economic turmoil.
The company announced in March that its profits for all of 2008 plunged 78.2 percent to HK$101 million, Figures for the second half of last year showed the company had fallen into the red, posting a loss of HK$149 million. Earnings were affected heavily by bad debts involving loans to small- and medium-sized enterprises.
Fubon Financial is also listed among the victims of the bankruptcy of Lehman Brothers. Fubon's purchase of Lehman minibonds also contributed significantly to Fubon's poor second half showing.
The company plans to raise its stake in Xiamen Bank to 50 percent, the Economic Daily News reported yesterday, citing unnamed sources familiar with the situation.
Meanwhile, the Taipei-based Chinese-language newspaper said Fubon Financial is planning to invest directly in the lender, instead of buying shares through its Hong Kong subsidiary.
Kung dismissed the report as inaccurate.
Shares of Fubon Financial surged 8.22 percent to a high of HK$3.95 near the close. The price fell slightly to end the trading day at HK$3.94, for a 7.95 percent rise, or HK$0.29.
Fubon Financial last week submitted a bid to purchase troubled AIG's Taiwan insurance unit, in a deal more than $2 billion. |
