The Bank of Taiwan (台灣銀行) will acquire the state-owned Central Trust of China (中央信託局) as a 100-percent owned business, the Ministry of Finance announced late last night, making the merged entity the nation's largest bank with a total market share of 11.59 percent.
The combined assets of the two state-controlled financial institutions are about NT$3 trillion (US$90 billion), and they handle a wide array of business operations spanning across banking, insurance and securities, according to a press release issued by the ministry yesterday.
The deal will see over 1,700 employees of Central Trust and its entire businesses transfer to the control of the Bank of Taiwan.
The ministry said it will form a task force using the two banks, the Cabinet and the Financial Supervisory Commission to facilitate the merger deal, which is estimated to take around 18 months to complete, according to the news release.
The announcement came as a surprise as yesterday morning Vice Premier Wu Rong-yi (吳榮義) had told lawmakers that the government would persevere with plans to auction off the Central Trust's various business units separately, despite strong opposition from lawmakers and employees of the lender.
On the sidelines of a question-and-answer session at the Finance Committee of the Legislative Yuan yesterday, Wu, who was commissioned to supervise the banking sector reform, had said the government was still pondering the separate-sale scheme, which could help achieve one of the reform goals of having at least one bank run by overseas investors.
The government has been pushing for consolidation of Taiwan's banking sector. To help achieve the targets, the authorities were still thinking about selling the Central Trust's banking, insurance and gold-trading units to different buyers.
Central Trust's employees, however, were strongly opposed to the proposed separate sale and had planned to take to the streets and vote on strikes. The employees were said to prefer a three-way merger plan that included both the state-owned Bank of Taiwan and the Land Bank of Taiwan (土地銀行).
Another hurdle to that plan was the decision made by lawmakers last week to
block the separate auction plan until the bank signed a collective agreement
with workers to guarantee job security.
“The separate-sale would be the best choice for the nation's finance
sector, though not to the staff, especially when there are a few foreign
investors interested in buying us,” the Central Trust's chairman Shea
Jia-dong (許嘉棟) had told the <
question-and-answer session yesterday.
Foreign private equity funds, like Temasek Holdings of Singapore, that could
resell the bank after restructuring were less welcome than those
international financial groups that would run the bank long-term, Shea had
said.
Workers could be employed by the Bank of Taiwan if the Central Trust was
ever sold separately in the future, the chairman added.
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