The Taiwanese government is to pay HSBC $1.46 billion to take over Taipei-based Chinese Bank, which it failed to sell in an auction in July.

HSBC said in a statement it plans to inject $300 to $400 million of fresh capital into Chinese Bank to ensure its enlarged operations will have "appropriate" financial ratios.

The acquisition will add to HSBC's eight branches in Taiwan, which is seen as the key to expanding its profitable wealth management business.

The UK bank has come under pressure to make an acquisition in Taiwan, the fourth-biggest market in Asia, after Citigroup, Standard Chartered and ABN AMRO all acquired Taiwan lenders over the last two years.

Chinese Bank was one of two remaining banks up for sale on the government's auction list, with Bowa Commercial Bank set to be sold in January. According to Financial Supervisory Commission data, the bank had TW$900 million of debt in excess of its assets as of 31 October.

HSBC paid $103 million for China Development Industrial Bank's 53 per cent stake in China Securities Investment Trust in 2001. It was then Taiwan's biggest fund manager.