Cathay Financial Holding Co (
The company, chiefly a life insurer, bought United World Chinese Commercial Bank (
Fubon Financial, also an insurer, meanwhile took over TaipeiBank (台北銀行) in an NT$80.3 billion all-share offer.
Other financial groups are also seeking partners. China Development's chairwoman, Diana Chen(陳敏薰), told reporters in September she expected to be in merger or acquisition talks by year-end and had "many candidates in mind." Hua Nan Financial told the Taiwan Stock Exchange last month that merging with First Financial was "just one" idea it's considering.
Fubon Financial said last month it had written to Sinopac Holdings expressing interest in a merger. Sinopac has declined to comment on the approach.
The government, as the controlling shareholder of Hua Nan, First Financial and Mega Financial Holding Co (兆豐金控), is well placed to direct the pace of consolidation. Some fund managers say it may try to speed up mergers to win votes.
"Financial stocks are likely to outperform ahead of the election as Chen seeks to show results from his financial- industry reforms," said Tracy Chen, who oversees US$73 million of assets at Prudential Securities Investment (保誠投信).
The outlook may change if President Chen loses KMT Chairman Lien Chan (連戰). While the KMT pushed for bank mergers when in power, a change of government scare investors.
"If Chen loses, there would be changes of top government officials and top management at the state-owned lenders," said Mei Chiang (蔣梅香), director of financial institutions ratings at Taiwan Ratings Corp (中華信評), 50 percent-owned by Standard & Poor's.
"There would be changes in the pace or stages of financial reforms," Chiang said.
Still, reducing Taiwan's tally of about 50 local banks is seen as key to boosting profits.
"Fewer and stronger market players are expected to enhance the industry's loan quality and improve the bottom line," Chiang said.
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