The Fair Trade Commission yesterday gave a green light to the merger between the state-owned Bank of Taiwan (台灣銀行) and the Central Trust of China (中央信託局), saying the deal would not pose a threat to competition within the domestic banking sector.
Despite the merger of Bank of Taiwan and the Central Trust of China, the nation's banking sector is still a highly fragmented market with strong competition among all players, the commission said in a statement released yesterday.
No monopoly worries
Since the Bank of Taiwan would not see a significant increase in its share of the nation's fragmented market after taking over its smaller rival, this merger could hardly cause concern regarding a monopoly or unfair competition, the commission said.
Bank of Taiwan announced in November last year that it planned to acquire the state-owned Central Trust as a 100-percent owned business. Following the merger, the Bank of Taiwan, which will be the surviving entity, will become the nation's largest lender with about a 10 percent market share in both the lending and deposit businesses.
The combined assets of the two state-controlled financial institutions are about NT$3 trillion (US$93.52 billion), and the deal is viewed as a key part of the government's market consolidation plans.
Uncertain fate
The government's efforts to encourage consolidation among local lenders are facing an uncertain fate after Vice Premier Tsai Ing-wen (
Critics argued the progress of financial reform, like the plan to reduce the number of financial holding companies form 14 to seven by the end of this year, is contrary to market forces.
But the Fair Trade Commission said in the statement yesterday that the Bank of Taiwan-Central Trust deal, that was originally orchestrated by the Ministry of Finance, could be a benchmark for industrial consolidation among all the state banks and ultimately the nation's finance sector. It would also be beneficial for the macro-economic environment, it added.
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