TaipeiBank, which was recently merged into Taiwan's Fubon Financial Holding Co (FHC), has opened a branch in Hong Kong and set its sights on grabbing a slice of the lucrative cross-strait trade financing business. TaipeiBank president Jesse Ding said yesterday the Hong Kong branch would also offer a stepping stone to the mainland market under Taiwan's revised Offshore Banking Unit (OBU) rules. 'We foresee growing business opportunities between Hong Kong and Taiwan, and Hong Kong and the PRC,' Mr Ding said. 'We'd like to focus on trade finance and secondly, through our new set-up in Hong Kong, we'd like to get more knowledge about the PRC since we foresee that in the foreseeable future cross-strait issues should be resolved.' Amendments by Taiwan's financial regulators had recently seen 'minor nuisances' contained in OBU regulations amended to allow Taiwan's banks to make loans to Taiwanese corporations operating on the mainland, Mr Ding said. Chief among the changes is a new rule that lifts a ban on securing loans against Taiwanese assets as collateral. The Hong Kong branch would be capitalised with a US$10 million injection from its new parent and aims to build a loan book of US$200 million within five years, Mr Ding said. Lending would be focused on the bank's Taiwan corporate customers and relationships with small and medium-sized enterprises to develop trade financing opportunities, he said. 'Fubon ranks No 3 in Taiwan in terms of credit-card issuance, and this is also a possible area of expansion. But for the moment, we have no plans to get into consumer banking in Hong Kong,' he said. Until its acquisition in August this year through a US$2.4 billion stock swap with FHC, TapeiBank was controlled by the Taipei city government, which held a 44 per cent stake in the bank. The acquisition saw it become a wholly owned subsidiary of FHC - a financial group that operates two insurance companies, a securities trading house, a bank and an asset management company with some NT$100 billion under management. As a result of the merger, FHC became the biggest privately owned financial holding group and sixth-largest bank in Taiwan. In the run-up to the merger, TaipeiBank had held discussions with a range of prospective suitors, Mr Ding said, and this included some exploratory talks with Standard Chartered Bank. In its home market, TaipeiBank operates 84 branches, 70 of which are in metropolitan Taipei. Return on equity was 9.2 per cent, Mr Ding said - 'below international standards but definitely ahead of our peers in Taipei'. Overdue loans classified according to international standards were 4.1 per cent. 'That is a very enviable position in Taipei's marketplace, and TaipeiBank has a reputation for being one of the best-managed banks in terms of credit control,' he said.