Three large banks agree on a merger

Minister of Finance Yen Ching-chang (顏慶章) announced yesterday evening that executives from the Bank of Taiwan (台灣銀行), the Land Bank of Taiwan (土地銀行) and the Central Trust of China (中央信託局) have approved a merger of the three institutions.

Yen said the merger -- expected to be completed by early 2002 -- will create the world's 74th largest bank and a lender controlling a fifth of the nation's banking industry.

The three-way merger will also form a bank whose market share in terms of deposits is 20.06 percent and whose loans represent 19.48 percent of those extended in the banking system, Yen added.

The move is part of a ministry plan to form larger scale banks. The merger will also revive a plan that was first announced in late 1999, but then was shelved in the middle of last year.

``The merger is the latest step in government efforts to consolidate the banking industry and we have resolved workers' concerns and objections toward the tie-up,'' Yen said yesterday.

The government wants to see consolidation among the country's more than 50 banks and 300 credit cooperatives and farmers' and fisherman's associations.

In December, the ministry told 12 state-controlled banks to merge into three to five banks to spearhead the consolidation.

Non-performing loans rose to 5.5 percent of total outstanding loans at the end of last year. Analysts estimate the total non-performing loans of the nation's banking industry could be as high as 15 percent.

Meanwhile, Taiwan's "Big Three" commercial banks -- Hua Nan Commercial Bank (華南銀行), Chang Hwa Bank (彰化銀行) and First Commercial Bank (第一銀行) -- have opted to make public their overdue loan ratios on a quarterly basis instead of revealing the figures in the middle of each month for the previous month, bank executives said yesterday.

The new practice, which takes effect immediately, is being adopted after the Ministry of Finance informed banks late last year that as of this year they are required to post specific information on their Web pages on a quarterly basis.

The information includes over-due loan ratios, balance sheets and profit and loss statements. Some new, private banks ceased publicizing their overdue loan ratios in January after the ministry gave the order.

Banks are expected to announce overdue loan ratios for the first quarter in the second half of April.

Nonetheless, a bank executive at Hua Nan Bank revealed that its overdue loan ratio at the end of February rose from 6.25 percent the previous month.

While he declined to reveal the actual figure, he implied that it is "close to, but no higher than 6.3 percent."