HSBC made a belated push into the Taiwanese banking market yesterday with the takeover of a lender that collapsed earlier this year after a run on deposits.

The deal is part of the bank’s plan to expand further into emerging markets and will boost HSBC’s presence in the Taiwanese banking market fivefold.

The move comes ahead of expected seismic political shifts that could bring the island into a better working relationship with mainland China and which one senior strategist at CLSA, the broker, said could make the Taipei stock market “the most exciting in Asia”.

Under Taiwanese rules the Government’s bad debt agency, the Central Deposit Insurance Corporation (CDIC), will pay HSBC about £750 million to take Chinese Bank off its hands. HSBC, meanwhile, will inject about £200 million of capital to plug the gaps in its acquisition’s tattered finances. It will also commit to retaining half the bank’s 2,400 employees.

For its part, the Taiwanese Government is eager to let foreign banking giants become consolidators of the local financial scene. The sector has only recently crawled out of a period of chaos that followed a consumer credit melt-down last year.

In alarming scenes earlier this year, customers of Chinese Bank sucked 30 billion Taiwan dollars (£457 million) of deposits from their accounts in the space of five days after a declaration of insolvency by the bank’s parent, Rebar Group.

HSBC’s move is seen by some analysts as a belated drive in a market where its rivals Citigroup, ABN Amro and Standard Chartered have stolen a march. The banking customers of Taiwan are the third wealthiest in Asia, and, because others have moved more quickly to snap up the prime acquisition targets, HSBC was running out of opportunities to enter the market through a takeover.

HSBC entered into direct negotiations with the CDIC after three successive auctions failed to find any takers.

With Chinese Bank now disposed of, the Taiwanese Government has only one distressed lender left to auction off.

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