SinoPac says it's ready to merge

SinoPac Holdings Co (建華金控), which has the second-highest percentage of overseas shareholders among Taiwanese lenders, said yesterday that it is open to any future expansion plans through merger and acquisition talks with other financial holding companies.

"The ultimate goal is to add value to the company by increasing gains for our shareholders and employees," SinoPac spokesman Kevin Peng (彭康雄) said yesterday.

Peng made the remarks in response to a newspaper report that SinoPac's board has decided to begin merger discussions with Cathay Financial Holding Co (國泰金控), Fubon Financial Holding Co (富邦金控) or Chinatrust Financial Holding Co (中信金控).

The report said that UK-based lenders such as Standard Chartered Plc and HSBC Holdings Plc are also interested in buying SinoPac.

"It's still premature for SinoPac to launch merger talks with any financial service institutions," Peng said. SinoPac is currently being advised by several investment banks, and may designate one of the banks to mastermind the plan in the future, he added.

Shares of SinoPac reacted positively to the news yesterday, rising NT$0.8, or 4.7 percent, to close at NT$17.7 per share on the TAIEX.

"Taiwan is still overcrowded, having a total of 14 financial holding companies," said William Fong (方偉昌), a banking analyst at Primeasia Securities Co in Taipei, "It will be an inevitable trend in the near future for these financial institutions to consolidate."

In June, SinoPac suspended merger talks with China Development Financial Holding Corp (中華開發金控), the nation's ninth-largest financial company by market value, following a management reshuffle at China Development. Peng said yesterday that they have terminated any merger talk with China Development.

But SinoPac "will be a coveted target for mergers since there are not too many good banks left in the marketplace," Fong said, referring to SinoPac's market performance in both its banking and securities arms.

Among all possible buyers, capital-affluent Cathay Financial is the most promising since it has been aggressive in taking over smaller rivals with strong securities arms.

SinoPac's securities arm will also be a worthwhile investment for both Chinatrust Financial and Fubon Financial, but the two possible contenders are currently too busy with other merger plans, Fong said.

Chinatrust Financial plans to complete its merger with Grand Commercial Bank (萬通銀行), a lender controlled by Uni-President Group (統一集團), by the year's end, while Fubon has recently signed an agreement with Arab Banking Corp to buy the latter's shares in the Hong Kong-based International Bank of Asia (港基銀行).

Although it is willing to yield its controlling stake, SinoPac said yesterday that it hasn't reached any decision so far whether it will hold open auctions to proceed with the merger plan.