Fubon to have IBA become overseas subsidiary

Michelle Hsu, TAIPEI, Taiwan, The China Post

After its Monday announcement about the deal to acquire a lion’s share in the International Bank of Asia (IBA), Fubon Financial Holdings yesterday said it would try to rename the Hong Kong bank Fubon Bank (Hong Kong), and turn the Hong Kong bank into an overseas subsidiary of the Fubon Bank.

Fubon Financial Holdings on Monday signed the deal with Arab Banking to acquire all its holdings in IBA, roughly a 55-percent stake of the HK$4.31 billion Hong Kong bank, at a price of HK$3.68, or US$0.47, per share. The largest overseas acquisition ever by a Taiwan financial group is commonly regarded as a move for Fubon to gain easy access to the mainland market.

The deal is estimated to cost Fubon Financial Holdings nearly NT$19 billion, around 1.16 times the net asset value of the bank. The company yesterday said that it’s planning to issue US$225 million in Euro-denominated convertible bonds to raise the huge amount required for the purchase from the international market.

In Hong Kong, IBA is a medium-sized bank, well regarded for its consumer banking businesses. The acquisition will help Fubon Bank provide fully-fledged consumer services to its overseas customers.

Fubon Financial Holdings has reported this overseas acquisition to the Ministry of Finance (MOF). Given three months for the review procedure, the largest overseas bank acquisition ever in Taiwan won’t be able to be completed until the end of this year.