Taiwan Cooperative in talks with foreign firms

Taiwan Cooperative Bank (合作金庫銀行), the nation's second-largest lender by assets, said it's in talks to form a strategic alliance with several foreign financial institutions, including France's BNP Paribas SA. It may also sell a stake.

"We have been in talks with several European and US financial groups, including BNP Paribas, over forging a strategic alliance," Chen An-hsiung (陳安雄), executive vice president of Taiwan Cooperative, said in a telephone interview. "No concrete agreement has been made."

Taiwan Cooperative is not the first state-run bank in Taiwan that has sought to team up with foreign financial institutions to improve competitiveness.

In 2002, Chang Hwa Commercial Bank (彰化銀行) formed a partnership with ING Groep NV, the biggest Dutch financial services company, in dealing with its non-performing loan problem and overhaul management. Chang Hwa, the nation's sixth-largest bank by assets, said last week that it was still undecided on which foreign financial institute would be the winning bidder for its global depositary receipt (GDR) issuance of 1.4 billion shares. The bank originally hoped to find an overseas investor to buy a stake of nearly 40 percent in the bank through the GDR issuance.

Last year, E.Sun Financial Holdings Co (玉山金控) reached a strategic alliance with Prudential Corp Asia through a share-swap deal. The British insurer now owns a 5 percent stake in E.Sun Financial.

Taiwan Cooperative may sell a stake of less than 20 percent to the foreign partner after forming an alliance, according to Chen.

"The plan is to introduce a foreign strategic partner to help upgrade our efficiency, not to sell a controlling stake to it," he said.

Taiwan Cooperative's ownership passed into private hands on April 4 after its employees bought a 12 percent stake and the government's holding fell to less than 50 percent. The government has reduced its stake in the bank to 48 percent from 60 percent as part of efforts to narrow the budget deficit and cut record national debt.

Taiwan Cooperative, with 183 branches across the country, plans to expand its business focus from farmers to other businesses, Chairman Sean Chen (陳沖) said in October.

Shares of Taiwan Cooperative rose NT$0.10, or 0.41 percent, to close at NT$24.20, while the benchmark TAIEX added 0.2 percent.