Chinatrust Financial, Taiwan's top credit card issuer, said on Monday it will let Morgan Stanley have a seat on its board within two months, in the latest sign of foreign interest in Taiwan's overcrowded banking sector.
"It will benefit our cooperate governance, and help us expand beyond the Taiwan market," chief investment officer Daniel Wu told Reuters by phone. Investor had pumped up shares of Chinatrust and local peers earlier this year, on hopes for big earnings growth as Taiwan has dropped restrictions on local banks' investment in China.
"The tie-up would bring an opportunity for Chinatrust to invest in a Chinese lender," said an analyst of a local securities house, who asked not be identified. "There would not be any substantial earnings contributions in the short term, though it points to a positive direction in the long run," said the analyst.
Morgan Stanley officials were not immediately available for comments. Morgan Stanley had acquired China's Nan Tung Bank in Zhuhai in 2006 to help tap the fast-growing Chinese market. Chinatrust could buy a stake of this lender via its co-operation with Morgan Stanley, Taiwan's Economic Daily reported on Monday. The US firm had a 4.01 percent stake of Chinatrust in June, and had accumulated more on the market since then, Wu said.
Chinatrust would be the second Taiwan bank in which Morgan Stanley has acquired a stake. The US company would pay $200 million for the right to buy up to 9.5 percent of E. Sun Financial, in part because Morgan Stanely was confident about the islands' economy in the longer term, E. Sun said in July. Foreign interest in the island's banking sector - Asia's fourth-largest - has heated up in the last two years, on hopes Taiwan will improve its business ties with China under President Ma Ying-jeou, who took office in May.
Carlyle Group, Citigroup, HSBC and Standard Chartered are among the major firms to have bought into Taiwan lenders. In mid-morning trading, shares of Chinatrust jumped 1 percent, slightly below the TAIEX index's 1.3 percent gain.
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