Minister of Finance Yen Ching-chang (
Yen said he expects to see 10 bank mergers by the end of this year, with the government encouraging such mergers among small credit cooperatives in particular.
The Bank of Taiwan's (
Other mergers include the Taiwan Cooperative Bank's (台灣銀行) takeover of Chinfon Bank (慶豐銀行) and First Commercial Bank's (第一商業銀行) merge with Pan Asia Bank Co (泛亞銀行) and Dah-An Commercial Bank (大安銀行).
Yen also said that the finance ministry will help set up a fourth asset management company in Taiwan.
The Bankers Association (銀行公會), Chinatrust Commercial Bank (中國信託商銀) and the China Development Industrial Bank (中華開發工銀) all have expressed interest in establishing an asset management company within the next few months. The asset management companies are expected to help clean up some NT$1 trillion in non-performing loans held by the banking sector. Yen said that Taiwan's non-performing loans may be as much as 2 percentage points higher than the government's official figure of 6.2 percent of the NT$14.6 trillion (US$445 billion) in total outstanding loans.
"We are quite confident with regards to the asset quality among our commercial banks, but we have a rather overcrowded financial sector," Yen said. "We want to encourage mergers to create economies of scale among the commercial banks."
The government is likely to pass a financial holding company law by the end of June. With more than 50 commercial lenders and over 300 credit cooperatives and farmers' and fishermen's associations in Taiwan, the government is hoping to use the new law to facilitate the establishment of holding companies in an effort to consolidate many of these financial institutions.
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