Wed, Oct 25, 2006 - Page 11 News List

HSBC could hold off for now on bank acquisitions

SHOWING PATIENCE The world's largest bank deflated speculation that it would acquire Taiwanese rivals in the near future but did not entirely discount the possibility

By Amber Chung  /  STAFF REPORTER

HSBC Ltd, the world's largest bank by assets, may not acquire Taiwanese rivals anytime soon as speculated, as the bank's executive said yesterday that local banks are overpriced at the moment.

Organic growth is the bank's priority, and besides acquisitions it hopes to accomplish this through investment in new channels such as the Internet. But acquisitions remain an option, HSBC President and chief executive officer Michael Smith said at a press conference in Taipei yesterday.

Smith made the remarks at an event in which HSBC Taiwan said its HSBC Direct online banking service was well received after one-month rollout and had achieved its year-end target.

The bank's direct banking service allows customers to open and manage their saving accounts through Internet and telephone, rather than in traditional branches. Taiwan is the third market worldwide in which HSBC has launched the service, and the first in Asia.

Smith said that there were too many local banks and that Taiwan needs to undergo further consolidation. But "they [local banks] are expensive" now, he said, after Standard Chartered Bank announced its NT$40.5 billion (US$1.22 billion) buyout of Hsinchu International Bank (新竹國際商銀) on Sept. 29.

Share prices need to be more "realistic" for any acquisition to become possible, he said.

HSBC has long been rumored to be in takeover talks with Far Eastern International Bank (遠東國際商銀), but the negotiations reportedly remain pending as the management refused to surrender management control.

Smith was tightlipped when asked if he had met with some local banks in his short trip to Taiwan, saying that he came to review the business and paid a courtesy call on the regulator.

Meanwhile, Far Eastern chairman Douglas Hsu (徐旭東) admitted yesterday that the bank is in merger talks with several interested foreign investors.

As long as the interested buyer is big enough and offers a good price, he did not rule out the possibility of relinquishing the control of the bank, Hsu said.

Far Eastern shares closed nearly 7 percent limit-up at NT$16.45 on the Taiwan Stock Exchange yesterday, boosted by market speculation that Smith may meet with Hsu for a potential partnership.

Meanwhile, smaller rival Standard Chartered said yesterday that it expected integration with Hsinchu International to be completed sometime next year.

"We are very busy," said James McCabe, chief executive of Standard Chartered Taiwan, regarding the acquisition of local banks.

The bank would continue to focus on completing the tender offer for and integration of Hsinchu International, he added.

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