Wed, Jan 18, 2006 - Page 10 News List

Resignation will `not affect' Land Bank's planning

AFTER HSIEH The bank's chairman said the final decision on whether it will merge with the Bank of Taiwan or privatize is up to the Ministry of Finance

By Amber Chung  /  STAFF REPORTER

State-run Land Bank of Taiwan (土地銀行), the nation's third largest lender by assets, said that it will continue reviewing a proposed merger with the larger Bank of Taiwan (台灣銀行), despite Premier Frank Hsieh's (謝長廷) resignation yesterday.

Hsieh had vowed to push for the creation of a world-class financial player.

"The second-stage financial reform is national policy and we will continue to move ahead with the evaluation of the proposed merger as well as the overseas and domestic share sales afterwards, as planned," Land Bank chairman Tsai Jer-shyong (蔡哲雄) told a press conference yesterday.

The bank is going to pick an adviser after the Lunar New Year holiday and the assessment report will be finished and tendered to the Ministry of Finance two months later, Tsai said.

The bank will accept the ministry's final decision on whether to go for a merger or its originally planned privatization, he said.

Hsieh had promoted the integration of the two state-owned banks, as the deal is expected to reinvent the merged entity, which would have combined assets of NT$4.7 trillion (US$147.2 billion), into the world's 80th largest bank.

Prior to the merger proposal, the Land Bank was slated to complete its privatization plan this year.

Given that almost all the preparation work has been done, the bank could launch its initial public offering within six months if the authorities decide on share sale, Tsai said.

The bank planned to release a 20.5 percent stake in the first stage this year.

It would then resume its strategic alliance talks, which had been put on hold due to the proposed merger, with some European insurance companies to expand the scope of business, Tsai said.

The Land Bank expected to create pre-tax net income of NT$6 billion, or around NT$3 per share, this year, up from last year's NT$4.8 billion, or NT$1.93 per share, it said.

The bank had a net value of NT$90 billion while its capitalization amounted to NT$2.5 billion, which could be translated into a high net worth of NT$30 per share, Tsai said.

"The bank is expected to be king of banking in share prices once it enters the stock market," Tsai said.

The Land Bank, which has already written off NT$9 billion in defaulted loans, plans to sell NT$24.5 billion in bad loans by the end of June, helping to reduce its non-performing loan (NPL) ratio to 2.5 percent and ultimately 2 percent by the end of this year, the bank said.

As of last month, the Land Bank has the highest NPL ratio -- 3.12 percent -- of the seven state-controlled banks, including Bank of Taiwan and Cooperative Bank (合庫銀行).

The bank has vowed to develop its wealth-management business -- where it holds an 8 percent market share among households having NT$3 million in assets -- by raising revenue to NT$45 billion this year, an increase from NT$22.5 billion last year, and continuing to lend to overseas Taiwanese companies through its outlets in Vietnam and Hong Kong, Tsai said.

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