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HONG KONG : The Industrial & Commercial Bank of China (ICBC) is in talks to acquire a stake in Taiwan's Cathay Financial Holding.
Cathay Financial is Taiwan's top listed financial holding group, with a market value of US$17 billion.
Reports said that ICBC is interested in buying about 20 per cent, that would put the deal at about US$3.4 billion.
Cathay Financial is bearing the fruits of improving cross-straits ties.
China and Taiwan last month agreed to ease restrictions on investment in banks, brokerages and insurers.
Chinese banks are flushed with cash to expand overseas while their Taiwan counterparts, although eager to compete overseas, are strapped for funds.
One analyst said that if ICBC takes a stake, it will only be a minority stakeholder, as the Taiwanese banking market is already over-saturated.
Reports said that talks between the two are still at an early stage.
So far, both ICBC and Cathay Financial have declined to comment.
But according to the reports, they are eager to sign a deal as soon as China and Taiwan conclude a free-trade pact early next year.
After a successful IPO three years ago, ICBC began its overseas expansion by purchasing 90 per cent of PT Bank Halim Indonesia.
It subsequently bought into Macau's Seng Heng Bank and also South Africa's Standard Bank.
At US$5.4 billion dollars, the Standard Bank deal is the largest overseas acquisition by a Chinese bank.
ICBC's aim is to triple the share of profit coming from abroad to 10 per cent of its books. - CNA/ms
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