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Taiwan's CTBC Financial, China's Citic Bank cancel deals
[TAIPEI] Taiwan's CTBC Financial Holdings, parent of Taiwan's top credit card issuer, and Chinese state-backed lender China Citic Bank Corp have cancelled investments in each other amid fresh political tensions between the two countries.
"It's been more than a year since both sides signed the contract ... Both have agreed to end the contracts," CTBC and China Citic Bank said in a separate statement.
The move comes after another major financial cross-strait deal fell through a year ago, and is the first failure of its kind since the election of pro-independence Democratic Progressive Party leader Tsai Ing-wen became president of Taiwan in May.
While neither company attributed the deals' failure to political forces, China regards Taiwan as a wayward province and stopped a communication mechanism with the island in June, suspecting Ms Tsai will push for formal independence.
Taiwan's Financial Supervisory Commission (FSC) Vice Chairman Kuei Hsien-nung said CTBC did not submit applications for the deal as China Citic Bank did not meet a key regulatory requirement.
The requirement is that Chinese banks which invest in Taiwanese banks must have branches in OECD countries for more than five years, he said.
China Citic Bank Corp and CTBC did not immediately respond to requests for comment.
In May 2015, CTBC agreed to pay NT$11.67 billion (S$496.6 million) for the 100 per cent stake in China Citic Bank Corp subsidiary Citic Bank International (China) Ltd.
In exchange, China Citic Bank Corp would buy a 3.8 per cent stake in CTBC. No price was disclosed.
China's Industrial and Commercial Bank of China and Taiwan's Sinopac Financial Holdings in September last year said they would let a US$600 million investment deal lapse because curbs against mainland Chinese investment in the sector had not been relaxed as hoped.
Earlier this month, CTBC said its subsidiary, CTBC Bank, had cancelled a deal to buy a 51 per cent stake in the Malaysian branch of Royal Bank of Scotland.