The International Commercial Bank of China (中國商銀), a banking arm of the nation's second-largest financial services provider, Mega Financial Holding Co (兆豐金控), will become the only remaining bank in the group after it merges with the holding company's other subsidiary, Chiao Tung Bank (交通銀行), a company spokesman said yesterday.
planned merger
The planned merger of the state-controlled company's two subsidiary banks is expected to be completed in one-and-a-half years, Mega Financial's executive vice president Joseph Shieh (
Details regarding the merger will be finalized within the next two weeks, including the name of the new banking entity, personnel reshuffles and integration of business, he said.
As to who will assume the new chairmanship -- Cheng Shen-chih (鄭深池), chairman of Mega Financial and Chiao Tung, or Lin Tzong-yeong (林宗勇), president of Mega Financial and chairman of International Commercial Bank -- of the newly formed bank, is yet to be decided.
However, as both Chiao Tung Bank and International Commercial Bank are operating under the same financial-holding umbrella, sensitive personnel issues and other merger-related details will be discussed and approved by boards of directors on behalf of bank shareholders, according to Shieh.
core entity
Chiao Tung Bank is Mega Financial's core entity. It was designated as an industrial bank in 1975 and is by far the nation's largest industrial bank in terms of assets, and ranks second in terms of direct equity investments, according to Taiwan Ratings Corp (
On the other hand, International Commercial Bank's strength is in corporate banking and foreign exchange, and has long been viewed as one of the nation's leading foreign exchange providers, according to Taiwan Ratings.
International Commercial Bank was included in the holding company at the end of 2002 and now runs 75 branches in Taiwan and 20 overseas.
Once merged, the new banking entity is expected to secure a 7.5 percent market share in Taiwan in terms of granting loans, making it the largest banking arm under holding companies, Shieh said.
Following the consolidation project, Mega Financial will continue seeking other lenders for mergers to raise its market share to 10 percent, Lin said on March 9.
The ideal subject would be from state-controlled, small or medium-sized banks, who have more than 50 branches and with most branches located in northern Taiwan, Shieh said yesterday. The performance of the targeted lender in retail finances will also be an important indicator, he said.
Mega Financial yesterday also reported a 6.5 percent drop in first-quarter unaudited profit from a year earlier to NT$5.06 billion, the company said in a filing to the Taiwan Stock Exchange.
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