Fubon Group may make bid for United World bank

The United World Chinese Com-mercial Bank (世華聯合商銀), the fifth-largest local lender by market value, would provide "good synergies" with the Fubon Group (富邦集團), Fubon's vice-chairman said, raising the possibility the group will bid for the bank when new laws take effect in November.

Fubon now owns 8.5 percent of the bank, in which the government is the main shareholder with a 29 percent stake.

``An 8.5 percent stake gives Fubon the right to hold United World's hand,'' Fubon Group Vice Chairman Daniel Tsai (蔡明忠) said in a recent interview. Asked if Fubon was considering a takeover, he said: ``The ultimate goal still needs to be pursued.'' ``United World's retail channels and its customers will provide good synergies with Fubon Group,'' Tsai said, adding that the two companies are ``comparing notes.'' New laws making it easier for insurers, banks and brokerages to combine under holding companies will take effect Nov. 1.

Buying the bank would allow Fubon, 15 percent owned by Citigroup Inc (花旗集團), to sell insurance and other financial products to United World's 3 million depositors. The bank's 73 branches, added to the 36 of Fubon Commercial Bank (富邦商銀), would achieve Fubon's target of 100 banking outlets.

``United World looks pretty juicy and Fubon would definitely be keen on swallowing it,'' said Lin Tsui-pin (林翠萍), a manager at Prudential Securities Investment Trust Co (保誠投信), which manages NT$45 billion (US$1.3 billion) in Taiwan.

United World is one of 12 state-run banks ordered by the Finance Ministry to merge with other banks in a government-led drive to streamline Taiwan's banking industry. The new holding-company laws, passed in June, aim to encourage the island's 50-plus banks and 300 other lenders to combine into stronger entities, better able to cope with rising bad loans.

United World said it's considering a merger, though company spokesman Chen Chien-chih (陳謙治) declined to name a possible partner.

``Joining a financial holding group can improve United World's competitiveness through cross-offering of products,'' Chen said.

Any merger would depend on the outcome of talks about a share swap and other terms.

The bank earned NT$6.86 billion in 2000, an increase from NT$6.37 billion a year earlier.

United World could be especially appealing because two-thirds of its three million deposit accounts pay 70 basis points less interest than the 3.3 percent offered on checking accounts because they're used for stock trading.

In the event of a takeover, United World would probably be owned by a new Fubon holding company, alongside Fubon Insurance Co (富邦產險), Fubon Commercial Bank, Fubon Life Assurance Co (富邦人壽), Fubon Securities Co (富邦證券). and Fubon Securities Investment Trust Co (富邦投信).

The group plans to create such a company after the new law takes effect in November in order to ease cross-selling, Vice Chairman Tsai said. Citigroup will own 15 percent of the new entity, Tsai said, reflecting its 15 percent holding in each of Fubon's five financial units.

He also said Fubon hopes that cross-selling to the group's 8 million clients will at least double the average of 2.5 products that each customer purchases annually.