Fuhwa eyes acquisitions after Yuanta

Fuhwa Financial Holding Co (復華金控) plans to acquire rivals to expand its banking business after completing its drawn-out merger with Yuanta Core Pacific Securities Co (元大京華證券), the nation's largest brokerage, early next year, the company said yesterday.

"The small scale of our banking arm is an obstacle to our development," Fuhwa Financial chairman Yen Ching-chang (顏慶章) told a media briefing.

The company will seek mergers or acquisitions with local lenders in order to increase the number of Fuhwa Bank (復華銀行) outlets, he said.

Yen, the nation's former ambassador to the WTO, continued his chairmanship at the nation's 11th biggest financial group after winning a board election yesterday.

Yuanta Core Pacific Securities grabbed six seats, or two-thirds of the financial holding firm's board, at an ad hoc shareholders meeting last Friday, paving the way for the completion of the merger deal.

Fuhwa Financial is expected to obtain NT$17.4 billion (US$529 million) to NT$23.4 billion from the capital restructuring after the merger is completed in the first quarter of next year, Yen said.

The company will use NT$12 billion to improve the asset quality of its banking unit, boosting its capital adequacy ratio to 10 percent and its coverage ratio to 50 percent, he said.

The rest of the funds will be used for acquisition, he said.

To enhance its regional presence, the bank will open more outlets in overseas markets like Hong Kong, Yen said.

Yen did not rule out possibility of investing in or acquiring foreign rivals in targeted overseas markets in order to expand.

Fuhwa Financial is planning to hold another provisional shareholders meeting by the year's end to approve a revised share swap ratio for its merger with Yuanta Core Pacific and to amend the company bylaws to add three independent seats on the board, which financial regulations require as of next year.

Previously, Yuanta Core Pacific had proposed swapping one of its shares for 1.5 to 1.7 Fuhwa Financial shares.

The company is also mulling renaming itself after the merger, and "the name change could represent a new phase unfolding in the future," Yen said.