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Fubon Financial shares trend higher on deal approval

Fubon Financial shares trend higher on deal approval

Taipei, March 20 (CNA) Shares of Fubon Financial Holding Co. -- one of Taiwan's leading financial holding firms -- moved higher Wednesday morning after local financial authorities approved the company's acquisition of an 80 percent stake in China-based First Sino Bank, dealers said. Many investors have high hopes that the acquisition will help Fubon Financial extend its reach in the huge Chinese market by building a larger distribution network that will boost its competitive edge, they said. As of 11:23 a.m., shares of Fubon Financial had risen 1.92 percent to NT$42.45 (US$1.42), with 25.71 million shares changing hands. The benchmark weighted index was down 0.10 percent at 7,830.60 points. "Buying is currently rotating to the financial sector this morning. Investors have simply seized the news to raise their holdings in Fubon Financial," MasterLink Securities analyst Tom Tang said. Accoading to a statement released Tuesday by the Financial Supervisory Commission (FSC), the top financial watchdog in Taiwan, Fubon Financial and its wholly-owned banking subsidiary Taipei Fubon Commercial Bank have secured approval from the FSC to acquire a 29 percent stake and a 51 percent stake, respectively, in the First Sino Bank. The acquisition will cost Fubon Financial a total of 5.65 billion Chinese yuan (US$911 million) or about NT$26.84 billion. According to the FSC, following the acquisition, First Sino Bank will become a Taipei Fubon Bank's subsidiary in China. Earlier, the FSC had approved an application filed by SinoPac Bank, another Taiwanese lender, to set up a subsidiary in China. First Sino Bank, established in 1997, is headquartered in the Lujiazui Financial District in Pudong, Shanghai. At present, it operates four branches and 10 sub-branches, largely conducting its business in cities in the Yangtze River Delta, the Pearl River Delta, and the Tianjin Bohai Economic Rim. The Chinese bank's shareholders currently include Hong Kong-registered Lotus Worldwide Ltd, Shanghai Pudong Development Bank and Wing Hang Bank. Lotus Worldwide is run by Taiwanese investors. "Fubon Financial is very aggressive in expanding its business in China. I expect the acquisition will raise Fubon Financial's efforts in broadening its network on the mainland following a previous acquisition of a stake in Xiamen City Commercial Bank," Tang said. In 2008, Fubon Financial had acquired a 19.99 stake in Xiamen City Commercial Bank through its unit Fubon Bank (Hong Kong). "A broader distribution network through the new acquisition is expected to help Fubon Financial gain the upper hand in the huge Chinese market where it aims to sell insurance policies," Tang said. In Taiwan, a financial holding company operates banking, insurance and securities businesses. In addition to the Taipei Fubon Bank, Fubon Financial owns large insurance assets, including the flagship Fubon Insurance Co. "Fubon Financial is a profitable company and its earnings have impressed many investors," Tang said. "It is likely for the company to post more than NT$30 billion in net profit in 2013," Tang said. (By Wu Ching-chun and Frances Huang)