* Chinese banks allowed to investment more in Taiwan peers
* Chinese banks can take up to 20 pct stakes
* Faster reviews for Taiwan banks' mainland expansion plans
By Faith Hung
TAIPEI, April 1 Taiwan will ease rules to allow
Chinese banks to buy bigger stakes in local banks and permit
more Chinese firms to invest in its financial industry, the
island's financial regulator said on Monday, marking a major
advance in cross-strait ties.
Taiwan will allow mainland banks to buy as much as 15
percent in unlisted local bank and financial holding companies,
the China Banking Regulatory Commission (CBRC) and the Financial
Supervisory Commission (FSC) said in a joint briefing.
The stake allowed to be invested in a financial holding's
banking unit will be raised to 20 percent. The rules will take
effect in 60 days.
There were no specific stake limits for either category
previously, but 5 percent was seen as a cap for regulators.
In exchange, CBRC will speed up the review process to allow
Taiwan banks to open a second unit in the same city in the
mainland, a CBRC official said.
"This is a big breakthrough," said the CBRC official. "We'll
see Chinese banks applying for buying a stake in Taiwan banks in
future," he said, without offering details.
Moves to bolster ties in Taiwan-China financial sectors have
lagged similar efforts in manufacturing and other areas owing to
Taiwanese concerns over Chinese influence.
China still claims the self-ruled island as its own
territory and reserves the right to use military force to
reclaim it, though economic ties have broadened rapidly and a
free trade agreement links the two sides.
The higher limits are expected to be well received by some
local banks and investors. Taiwan's banking sector is crowded
and highly competitive, with about 37 local banks serving the
island's 23 million population, and they have little in the way
of overseas operations to fuel growth.
Taiwan's banking sector share index has surged by
more than 20 percent since November, largely on expectations
that cross-straight investment rules would be eased and local
banks would be allowed to expand more quickly on the mainland.
"Cathay Financial, Chinatrust Financial
and Ta Chong Bank, which is controlled by the Carlyle
Group, and some other smaller banks could attract Chinese
interest," said Albert Hsieh, an assistant vice president at
Shinkong Asset Management Co.
Cathay is Taiwan's biggest privately-run finanical holding
firm, while Chinatrust is its biggest credit card issuer.
EnTie Bank, controlled by private equity fund
Longreach Group, is also seen as a possible candidate for
Global private equity firms like Carlyle and Longreach have
had a tough time exiting their bank investments in Taiwan amid
disagreements over valuations.