* Taiwan's Fubon seeks 51 pct stake in First Sino Bank-sources * "Smooth communication" between Fubon, China regulators * Taiwan's Mega studying rival proposal By Faith Hung and Emily Chan
TAIPEI, Oct 3 (Reuters) - Taiwan's Fubon Financial is seeking a 51 percent stake in China-based First Sino Bank in a deal worth about T$20 billion ($683 million), and sees the deal done by the end of this year, two sources with knowledge of the matter said on Wednesday.
Fubon, which has been among the most aggressive Taiwan banks in expanding into China, plans to buy the stake from Taiwan's Pou Chen Group, a major supplier of Nike shoes, to help it tap the huge mainland market faster, one of the sources told Reuters.
"Fubon is mostly done with its due diligence on First Sino," said the source, who spoke on condition of anonymity due to the sensitive nature of the deal.
"Communication between China regulators and Fubon has been smooth," added the source.
First Sino is 60 percent owned by Pou Chen, 30 percent by Shanghai Pudong Development Bank and the rest by Wing Hang Bank . It was set up in 1997 to help Taiwanese companies operating in China get funding, and that remains its main business.
Taiwan's financial companies have been anxious to tap the huge mainland market as trade ties across the Taiwan Strait boom, helping them beat a saturated home market.
The deal would give Fubon 13 branches in big cities across China to add to the 31 it has in China's southeastern Fujian Province via its stake in Xiamen Bank.
Calls seeking comment to Fubon's president, Victor Kung, were not immediately answered.
However Fubon could face opposition in its bid. Vice Finance Minister Tseng Ming-chung told Reuters recently that Mega Financial , which is controlled by the Taiwan government, is also interested in investing in First Sino.
"The factors that could affect the outcome of this acquisition are Mega and decision of regulators from both sides," added the source.
Mega may face regulatory hurdles however given the Taiwan government's controlling stake. Mega Vice President Grace Lin could not immediately be reached for comment.
Fubon's chairman, Daniel Tsai, and Kung gave a briefing on the planned acquisition on Tuesday to Taiwan's financial regulator, the Financial Supervisory Commission (FSC), the second source said.
"They went to talk about Fubon's China expansion strategy," the source said, but could not elaborate.
Shares of Fubon ended down 0.6 percent on Wednesday, trailing the 0.4 percent fall of the broader market . Mega shares ended down 1.8 percent.
(Editing by Jonathan Standing)
Keywords: FUBON FIRSTSINO/