Bank of East Asia's success in winning approval to upgrade its Taipei representative office into a full branch - the first Hong Kong-incorporated bank to do so - might set a precedent for other domestic players planning similar moves, deputy chairman and chief executive David Li Kwok-po says. He said yesterday that one of the difficulties faced during the lengthy approval process was explaining to Tai_ wan's Ministry of Finance the bank's shareholding structure and the proportion of shares held by mainland Chinese. Mr Li said that besides the identifiable mainland interests, the Taiwanese authorities wanted to count those BEA shares lodged in mainland-backed banks in Hong Kong by outside investors through nominee companies as mainland interests. However, even if these shares are included, BEA's mainland interests still only account for 11.6 per cent of its issued capital, which is significantly below the 20 per cent ceiling specified under Taiwan law. Mr Li said three times in the space of two years the bank had to present the shareholder register to Taiwan authorities with the help of the Hong Kong Monetary Authority. Raymond Yu Hok-keung, head of the bank's China division, said the whole process might have to be repeated when it applied to set up a second Taiwan branch. The upgrading of its first Taiwan branch means the bank is able to extend its services to Taiwan businessmen investing in mainland China, an area not covered by Hong Kong before. Other banks planning similar moves include the China and South Sea Bank, Dah Sing Bank and Wing Lung Bank. BEA also said yesterday it had launched a $1.8 billion floating rate certificate of deposit issue. This FRCD will pay a coupon rate of 37.5 basis points over the three-month Hongkong Inter Bank Offered Rate. The proceeds will be used to satisfy lendings approved this year and will be drawn down early next year.
