The acquisition will increase HSBC’s island-wide branch network from eight to 47, giving it a presence in all the major cities in Asia’s fourth biggest banking market. Under the terms of the transaction, HSBC will also be able to convert three business offices of The Chinese Bank into new branches.
The agreement relating to this acquisition will result in HSBC assuming The Chinese Bank’s assets, liabilities and operations with a payment by the CDIC to deliver an agreed net asset position. In addition, HSBC will provide certain additional capital to ensure that its enlarged operations maintain appropriate financial ratios. The amount of such additional capital will be determined by reference to the balance sheet as at completion. Based on information currently available, it is estimated that this will be between the Taiwanese dollar equivalent of $300 million to $400 million.
Vincent Cheng, chairman of HSBC, said: Taiwan is a key component of HSBC’s Greater China positioning. Over 750,000 Taiwanese companies currently operate in China and there was $7.6 billion of foreign direct investment from Taiwan in 2006, up over 180% year-on-year. Together with our market leading franchise in Hong Kong and position as the largest foreign bank in China, HSBC is strongly positioned to benefit from the growing level of trade and investment in Greater China and across the region.
