Cathay largest syndicate: survey

Cathay Financial Holding Co (國泰金控) continues to be the nation's biggest conglomerate by assets, with many rivals having experienced major shakeups after a series of merger and acquisition (M&A) activities over the past two years, China Credit Information Service Ltd (中華徵信所) said yesterday.

Cathay Financial controlled NT$3.08 trillion (US$94 billion) of assets at the end of last year followed by Taiwan Cooperative Bank's (合作金庫銀行) NT$2.58 trillion and Taishin Financial Holding Co's (台新金控) NT$2.35 trillion, according to data from a survey released by China Credit yesterday.

Taiwan Cooperative and Taishin Financial were two wild cards elbowing into the list of top ten syndicates for the first time after their takeover of Farmers Bank of China (農民銀行) in May and Chang Hwa Bank (彰化銀行) last year.

"M&As played a key role in the change of positions," China Credit's president David Chang (張大為) said at a press briefing.

Another example was Yuen Foong Yu Group (永豐餘), whose core business is paper manufacturing, which made it to ninth spot after its International Bank of Taipei (台北國際商銀) merged with SinoPac Holdings (建華金控) last year.

The newcomers kicked Shin Kong Financial Holding Co (新光金控) out of the top ten, for the first time, and into 11th position from second in 2004, the survey showed.

Besides Formosa Plastics Group's (台塑集團) sixth place, down from fifth, and Yuen Foong Yu, the remaining eight of the 10 biggest syndicates in Taiwan were all financial institutions, it said.

Consolidation of the fragmented financial sector would take longer than expected, considering the public concern over the possibility that the nation's financial resources could be controlled by a few family-run financial groups, China Credit's editor-in-chief Liu Jen (劉任) said.

Liu named several favorable potential mergers, including one between Cathay Financial and Fubon Financial Holding Co (富邦金控) that could create a financial group with combined assets of NT$4.72 trillion with complementary synergies.

A merger between state-controlled Hua Nan Financial Holding Co (華南金控) and First Financial Holding Co (第一金控) would leave the new entity as the second largest syndicate in Taiwan, ahead of Taiwan Cooperative he said.

Meanwhile, the survey showed 217 out of the top 250 conglomerates have invested in China, four more than in 2004, with the number of China-based subsidiaries rising to 2,053 from 1,788 over the same period.

However, companies that invested in China saw a narrower margin, while the amount of investment and debts continued to increase, which could indicate the nation's rising operation costs and the decreasing availability of preferential investment terms, Chang said.