First Financial seeks merger targets

First Financial Holding Co (第一金控), Taiwan's seventh largest financial services provider, expects to take a leading role in banking consolidation, rather than becoming a merger target of its competitors, a company official said yesterday.

"We'd like to play the role of pushing for consolidation, instead of sitting idly by and waiting to be merged," First Financial's president Chao Yuan-chi (趙元旗) said at a press event.

Chao has just returned from a joint overseas roadshow led by government officials. He declined to elaborate on the company's merger strategy.

To strengthen competitiveness in the banking sector, the Financial Supervisory Commission announced last December its criteria for financial holding company mergers, as part of an effort to create fewer -- but bigger -- financial-service companies.

Taishin Financial Holding Co (台新金控) has been seen as the top candidate to merge with First Financial, as Chao was executive vice president of Dah An Commercial Bank (大安商銀) when it merged with Taishin International Bank (台新銀行) in 2002. Fubon Financial Holding Co (富邦金控) and Cathay Financial Holdings (國泰金控) have also expressed strong interest in buying into First Financial.

Stressing that the company has not located a merger target, Chao said the priority is to continue with a company-wide restructuring and reorganization, thereby improving service quality and boosting sales volume.

"This way, we can get the best deal [in a merger]," he said.

First Financial reported pre-tax sales of NT$10.8 billion last year, with earnings per share (EPS) standing at NT$1.80. Its banking arm, First Commercial Bank (第一銀行), reported pre-tax sales of NT$12 billion during the same time, with EPS of NT$2.60. Audited results for last year will be released in May.

On Monday, President Chen Shui-bian (陳水扁) reiterated the government's determination to push forward with financial reform, saying that the number of government-owned financial institutions will be halved by the year's end -- currently there are 12 -- while the top three holdings companies will each have a market share of over 10 percent.

During the meeting, Chen instructed Vice Premier Wu Rong-i (吳榮義) to overcome challenges and difficulties to complete the reforms.

The government's financial reform plan, which was announced by the president last October, also aims to cut the number of holding companies in half, to seven firms from the current 14, by the end of next year, and help at least one financial institution become listed overseas or be taken over by foreign investors.

Chao meanwhile, citing responses he received during the roadshow, said overseas investors also support restructuring in the nation's financial sector, to reduce the number of players and strengthen competitiveness.