Financial authorities said yesterday that they would stick to the policy of withholding approval for the establishment of new bank branches this and next year, as concern over overbanking remains.
Banks that want to expand their business bases are encouraged to continue pursuing merger and acquisition opportunities to acquire branch licenses, a Financial Supervisory Commission official said at a press briefing.
Financial institutions should use mergers and acquisitions to achieve reasonable economy of scale in the oversaturated market, said Susan Chang (
In future, the commission will review the necessity of approving applications for additional branches by both local and foreign banks in the first half of every year, she said.
Taiwan's banking system is still fraught with problems of fragmentation and interest margin compression, the international rating agency Fitch Ratings said yesterday.
Fitch has in recent months announced a series of rating upgrades on certain Taiwanese lenders, especially privately run banks that have been successful in developing a profitable consumer banking franchise, the agency said in a statement.
"The better-managed private banks in Taiwan had benefited from the expansion of retail banking through improved asset quality, increased diversification of revenues, strong fee income growth and enhanced risk management," Fitch said.
Looking ahead, "increased transparency and closer regulation in the credit card and cash card businesses should continue to support the performance of these banks as well as the industry as a whole, as well the gradual recovery in mortgage lending," Fitch said.
Taishin International Bank (台新銀行), whose Fitch rating was upgraded to `BBB' from `BBB-' in July, yesterday formally received the green light from the Financial Supervisory Commission to take over all the assets and liabilities of the 10th Credit Cooperatives of Hsin Chu (新竹十信), effective Oct. 18.
The NT$1.4 billion (US$41.5 million) merger will add another 12 branches to Taishin for a total of 101 across the country, making it the nation's 12th bank to have more than 100 branches, according to the commission's records.
Hua Nan Commercial Bank (華南銀行), with 181 outlets, has the most branches nationwide.
The First Commercial Bank (第一銀行) is second, followed by the Taiwan Cooperative Bank (合作金庫) and Chang Hwa Commercial Bank (彰化銀行).
The nation's financial holding companies pursued expansion through consolidation in droves this year.
Examples include Chinatrust Financial Holding Co (中信金控), which won its bid to acquire Fengshan Credit Cooperatives (鳳山信用合作社) in July, and E. Sun Financial Holding Corp (玉山金控), which formally took over the Kaohsiung Business Bank (高雄企銀) earlier this month.
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