TAIPEI: Fubon Financial Holding Co, Taiwan's second-largest publicly traded financial-services company, plans major investment in the southeastern province of Fujian once a new financial accord is struck between Taiwan and the mainland.

The company is in "advanced discussions" with mainland insurers and brokerages in Xiamen city and other parts of the province, Victor Kung, president of Fubon Financial, said in an interview in Taipei yesterday. The Taipei-based company also expects to win Beijing's approval by the end of the year to set up a property and casualty insurer in Xiamen, Kung said.

Leaders from both sides of the Straits are poised to sign agreements that will ease curbs on investments in banking, insurance and securities. The broad framework for cooperation was set on April 26 at the third round of cross-Straits talks.

Fubon doesn't plan to expand in larger mainland cities because it can't compete with local firms, Kung said. Fujian, which has a population of 35 million, also shares the same dialect as Taiwan.

Fubon, the first Taiwanese financial company to buy a stake in a mainland bank through its Hong Kong unit, plans to increase its almost 20 percent stake in closely held Xiamen City Commercial Bank after the cross-Straits accord on financial services is signed, Kung said. Existing rules cap each overseas investor's holding in a mainland lender at 20 percent.

"For the next three years, we will continue to be investing" on the mainland, Kung said.

Bloomberg News

(HK Edition 08/06/2009 page2)