United World Chinese Commercial Bank (世華銀行) and other lenders rose as much as 7 percent on expectations Fubon Group (富邦集團) and Cathay Life Insurance Co Ltd (國泰人壽) may buy Taiwan's third-largest bank, raising hopes of more bank mergers.
Fubon, a 15 percent-owned affiliate of Citigroup Inc and owner of Fubon Insurance Co (
Cathay Life, the nation's biggest insurer, this month increased its stake in United World to about 5 percent after buying a stake from Taichung Commercial Bank (
"Whoever ends up in control of United World will boost its competitiveness," said Aaron Wu, who manages NT$900 million (US$26 million) in stocks at Barits Securities Investment Trust Co (
"We want to deepen our understanding of United World to see if the partnership is appropriate," Deputy Chairman Richard Tsai said. "If we merge, it would be after the formation of Fubon's holding company."
United World Spokesman Chen Chien-chih (陳謙治) said he couldn't make an announcement as no agreement had yet been made.
Taiwan's banking industry is crowded with about 50 banks and more than 300 other lenders. It's also suffering as slowing economic growth drives bad loans higher.
The government is pressuring banks to consolidate into fewer and stronger institutions as part of an industry cleanup, which last week saw it seize control of 36 troubled credit cooperatives. In June, parliament passed legislation allowing the creation of holding companies that can acquire lenders, securities companies, insurers, and money managers.
The TAIEX Bank/Insurance Index rose 4.4 percent on optimism about mergers in the banking sector.
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