China Development Industrial Bank (
"We are talking with several banks including Bank Sinopac," Grace Fang (
The merger would combine Taiwan's biggest publicly traded bank with one of Taiwan's best-run financial institutions often regarded as the top pick by institutional investors.
Bank Sinopac had a non-performing loan ratio of 0.96 percent as of the third quarter against 6.5 percent for the average banking sector.
Chia Chen-I (
While the talks with China Development are "at a very early stage," such a partnership will "definitely help Sinopac to become bigger," he said.
Shares in SinoPac rose 3 percent to NT$13.80 yesterday while China Development Bank rose 0.4 percent to NT$24.80. At the end of March, SinoPac had total assets of NT$221 billion while China Development had total assets of NT$167 billion.
Any merger would not happen until mid-2001 when the Taiwanese legislature is expected to approve law regarding financial holding companies. But how the two companies -- both seen as having close ties with the former ruling KMT -- integrate their businesses is an open question, analysts said.
Yin Yen-liang (尹衍梁), the head of the Ruentex Group and the managing director of Bank Sinopac, sits on the board of China Development.
"It is difficult to say how meaningful it would be for the China Development," said Patrick Pang, a banking analyst for Lehman Brothers. "And I don't know how much China Development could bring to Sinopac."
Bruce Richardson, head of regional bank research for Indosuez W.I.Carr, believes that Sinopac's decision to set up an holding company may indicate the bank's willingness to acquire other financial institutions rather than joining up with one big bank.
"If the banks are talking about holding structures, they are not serious about merging with each other," he said.
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