Dec. 14 (Bloomberg) -- HSBC Holdings Plc, trying to catch up with Citigroup Inc. and Standard Chartered Plc, will take over Taiwan's Chinese Bank, a unit of the bankrupt Rebar Group that was seized in January following a run on deposits.

Central Deposit Insurance Corp., the government's bad-debt agency, will pay HSBC NT$47.49 billion ($1.5 billion) to take control of Chinese Bank, it said in a statement today. HSBC will provide $300 million to $400 million of capital to shore up finances, and the acquisition will increase its island-wide branches to 47, the bank said in a separate release.

HSBC, Europe's biggest bank by value, in 2001, paid $103 million for China Development Industrial Bank's 53 percent in China Securities Investment Trust Corp., then Taiwan's biggest fund manager. The lender is speeding up its expansion after rivals including Citigroup added branches and bought assets in Taiwan to serve Asia's wealthiest people outside China and Japan.

``HSBC is under heavy pressure to accelerate its acquisition after Citigroup and Standard Chartered,'' said Parker Wu, a fund manager at Agricultural Bank of Taiwan who helps manage the equivalent of $150 million in Taipei. ``It's positive for Taiwan banks as the HSBC move will help stimulate and upgrade the overall competitiveness.''

The acquisition will add to HSBC's eight branches in Taiwan. Chinese Bank, based in Taipei, is one of two remaining banks up for sale on the government's auction list, with Bowa Commercial Bank set to be sold on Jan. 31.

`Key Component'

``Taiwan is a key component of HSBC's Greater China positioning,'' Vincent Cheng, HSBC's Asia-Pacific chairman, said in the statement. ``HSBC is strongly positioned to benefit from the growing level of trade and investment in Greater China and across the region.''

The acquisition will add to the London-based bank's earnings from Asia, where it generated 47 percent of its pretax profit in the first half of this year according to its interim report. Chairman Stephen Green said last month the bank will add more banks in emerging markets.

HSBC negotiated the deal directly with Central Deposit Insurance after three rounds of auctions for Chinese Bank failed yesterday. In Taiwan's bank auctions, the winning bidder receives money from the government to take over sound assets, including branches, and at least half of the employees.

Central Deposit Insurance said in July an auction of Chinese Bank failed to attract any investors amid concerns about the ``professionalism'' of the bank's 2,400 workers, at least half of whom they would be required to employ.

Banking Problems

Chinese Bank's customers withdrew NT$30 billion in five days in January after two other units of the Rebar Group that the company made loans to declared insolvency on Jan. 4. Chinese Bank had NT$22.9 billion more debt than assets on May 31 and a bad-loan ratio of 18.3 percent, according to Financial Supervisory Commission data.

Earlier this year, HSBC bought Taiwan's Chailease Credit Services Co., one of the island's biggest factoring companies.

Taiwan on Oct. 2 agreed to pay Cathay United Bank, the banking unit of Cathay Financial Holding Co., NT$12.9 billion to take control of China United Trust & Investment Corp., after the company was put under government oversight in March because its liabilities exceeded assets.

On June 8, Central Deposit Insurance agreed to pay NT$6.9 billion to ABN Amro Holding NV for assuming control of Taitung Business Bank. Chinatrust Financial Holding Co. on May 31 accepted NT$4.49 billion for taking over the Enterprise Bank of Hualien.

The turmoil in the island's banking industry has given foreign companies an opportunity to widen their Taiwan networks through acquisitions.

New York-based Citigroup, the most profitable overseas bank in Taiwan, agreed in April to buy the Bank of Overseas Chinese for NT$14.1 billion. London-based Standard Chartered Plc in September 2006 announced a NT$40.5 billion acquisition of Hsinchu International Bank, the industry's first overseas takeover.

To contact the reporters on this story: James Peng in Taipei at jpeng7@bloomberg.net;

Last Updated: December 14, 2007 03:43 EST