Union Bank of Taiwan (
The bank's bid will help increase its number of branches from the current 40 to 87 in total.
"This is a very worthwhile deal since Union Bank will be allowed to immediately take over Ching Shing's 47 branch licenses, including 34 branches currently in operation," the bank's president Lee Shian-chang (
Lee added that half of Chung Shing's 34 branches in operation are located in northern Taiwan, adding to the bank's existing 32 branches.
After the deal, Union Bank will also have a total of 25 branches in central and southern Taiwan including eight branches of its own.
"Therefore, there's no urgency for us to relocate branches at this point," Lee added.
The debt-ridden Chung Shing fell into the government's hands in October 2001 and has been in the CDIC's custody since then. Currently, Chung Shing has a net worth of NT$4.355 billion, meaning Union Bank only paid some NT$2.8 billion to acquire 47 branch licenses.
"Each branch costs between NT$50 million and NT$80 million, which makes the deal a bargain to us," Lee said.
He denied that Union Bank is short of cash, saying that "we have confidence in concluding the deal successfully."
He, moreover, expressed confidence in breaking even in two to three years after officially closing the deal in April.
Financial Supervisory Commission chairman Kong Jaw-sheng (龔照勝) yesterday heralded Union Bank's success in the deal.
"The auction result is significant in the sense that small banks, as long as they are healthy and competitive, can still outperform big rivals," Kong said.
Union Bank has NT$239.4 billion in total assets with a net worth of NT$18.2 billion. With a capital adequacy ratio of 10.17 percent, Union Bank's bad-loan ratio is lower than 2.66 percent, according to Kong.
Three other banks placed bids in yesterday's auction, including Chinatrust Financial Holding Co (中信金控), Taishing Financial Holding Co (台新金控) and Cosmos Bank Taiwan (萬泰銀行), although a total of seven banks had previously expressed interest in bidding.
According to the contract, Union Bank is required to retain one-tenth of Chung Shing's current 800 employees for at least one year, although the government's Financial Restructuring Fund (
After climbing to a high of NT$11.5 on the Taiwan Stock Exchange yesterday, shares of Union Bank closed at NT$11.3, up NT$0.45, or 4.15 percent.