A Taiwan bank is interested in buying a stake in a Shanghai bank to spearhead the island province's penetration into the mainland's banking industry, industry insiders told Shanghai Daily yesterday.
Taiwan's First Commercial Bank has set its sight on the First Sino Bank, said Sun Guoping, a local representative of the Hong Kong-headquartered Shanghai Commercial Bank.
"Because of First Sino's investor structure, which is different from other mainland banks, other Taiwan banks are also seeking cooperation with it," Sun said. First Sino declined to comment on the possible purchase of its shares.
Established in 1997, First Sino, which has a registered capital of US$100 million, is the first joint venture between Taiwan investors and a Chinese mainland bank.
Hong Kong-based Lotus World-wide Ltd., whose majority investors are from Taiwan Province, owns 80 percent of the bank, with Shanghai Pudong Development Bank holding the balance.
Lotus Worldwide is an investment vehicle for Taiwan companies with long-term and large-scale projects on the mainland.
As part of its expansion, First Commercial aims to acquire banking stakes on the mainland, where restrictions are being relaxed on over-seas investment following China's entry into the World Trade Organization, said General Manager Cai Zexiong.
"Purchasing a stake in a mainland bank is a short cut for Taiwan banks to enter the banking industry here," said Sun.
At present, Chinese banking regulations require an overseas bank to set up a representative office before applying for a license to operate on the mainland.
Despite the island's economic slowdown, Taiwan banks, with "more mature management and marketing skills," are still competitive enough for their acquisition drive on the mainland, Sun said.
To secure an early foothold, eight Taiwan banks have applied with the People's Bank of China to set up representative offices on the mainland, and have even chosen locations, he said.
The United World Chinese Commercial Bank, the Land Bank of Taiwan and the First Commercial plan to open their offices in Shanghai, while China Trust Commercial Bank and the Corporate Banking Ltd. have chosen Beijing.
The International Commercial Bank of China, Hua Nan Commercial Bank Ltd. and Chang Hwa Bank, meanwhile, have set their sights on Suzhou, Shenzhen and Kunshan cities respectively.
"Most Taiwan companies on the mainland are located in those areas," Sun said. "The banks' representative offices there will provide Taiwan enterprises with services familiar to them."
Under the mainland banking rules, Taiwan banks' representative offices are allowed to collect information and conduct research for future business expansion only.
(eastday.com December 7, 2001)
