Stocks rose, led by Mega Financial Holding Co (兆豐金控) and China Development Financial Holding Corp (中華開發金控). The government plans to seek merger partners for state-controlled lenders, a Chinese-language newspaper reported.
"The government is pushing hard on financial reforms ahead of the March presidential election," said Mike Shiao (蕭光一), a fund manager at Invesco Taiwan Ltd (景順投信). "Government-instigated mergers will make the financial sector more efficient and competitive."
The TAIEX rose 98.40, or 1.7 percent, to 5870.17. Banks were the second-biggest gainer as a group. The Taiwan Futures Index added 1.8 percent to 5914.
About six stocks advanced for every one that declined.
Mega Financial, Taiwan's third-largest financial company by market value, rose 40 cents, or 2 percent, to NT$20.40. China Development Financial, the fifth biggest, added NT$0.90, or 6 percent, to NT$16, its highest in 52 weeks.
Chinatrust Financial Holding Co (中信金控), Taiwan's fourth-biggest financial services company by market value, rose 40 cents, or 1.2 percent, to NT$33.80. Chinatrust said late Monday after the market closed that it plans to write off NT$10.1 billion in goodwill and bad debt acquired when it bought Grand Commercial Bank (萬通銀行).
The write-off will lower Chinatrust Financial's profit before tax to NT$9 billion from the NT$19 billion it estimated earlier, the company said in a statement. It will also lower the bank's bad loan ratio to 2.4 percent,the statement said.
Chinatrust has about NT$25 billion of bad loans, equivalent to 3.9 percent of total lending, Perry Chang (張明田), the company's financial controller, said last week.
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