Sunday, May 1, 2011

Raising the financial stakes

l    Since the signing of the “Economic Cooperation Framework Agreement (ECFA)” with China, Taiwanese banks have been allowed to invest in or acquire shares in Chinese banks in order to expand their presence in the mainland market.

l  Currently, Taiwanese banks' investment share in Chinese banks is restricted to 20 percent and each Taiwanese bank is only allowed to invest in two Chinese banks at most. As such, there’s been increasing calls within Taiwan’s financial community to raise the shareholding cap to 40 percent.

l  Among the Taiwanese banks that have established a foothold on the mainland, Fubon Financial (TaiEx 2881) has been one of the more aggressive players. As the second largest financial holding firm in Taiwan, its business covers banking, securities, asset management, and the sports lottery.

l  Fubon currently holds 19.99 percent of shares in China's Xiamen Bank, which performed exceptionally well and posted 20 percent growth last year, despite Chinese government efforts to curb asset growth in the banking industry.

l  Along with Fubon, many Taiwanese financial institutions are waiting to see how Beijing responds to these requests and if Taiwanese banks, insurance companies and brokerage houses can be granted “quasi-citizen” status soon for their operations on the mainland.

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