Wed, Jan 03, 2007 - Page 12 News List

Bank of Taiwan mulling acquisition of Land Bank

By Amber Chung  /  STAFF REPORTER

The state-owned Bank of Taiwan (台灣銀行) may revive a plan to acquire smaller state-owned rival Land Bank of Taiwan (土地銀行), paving the way for the creation of the nation's largest bank and a regional heavyweight, the lender said yesterday.

"We are open to any growth options, including further mergers and acquisitions with the lender [Land Bank of Taiwan] as a possible target," Bank of Taiwan chairman Tsai Jer-shyong (蔡哲雄) said during a press conference yesterday.

The bank should grow to at least US$200 billion in assets to be able to compete with international rivals, Tsai said.

Bank of Taiwan currently controls more than US$100 billion in assets after taking over its smaller state-run competitor Central Trust of China (中央信託局). The merger is scheduled to be completed by the end of June.

Tsai, 61, formerly the chairman of the Land Bank of Taiwan, officially took the helm of the nation's biggest bank yesterday, replacing Hsu Teh-nan (許德南), who now chairs the Taiwan Cooperative Bank (合作金庫銀行).

The planned merger between the Bank of Taiwan and the Land Bank of Taiwan was first trumpeted by former premier Frank Hsieh (謝長廷) around a year ago as the government pushed for consolidation of the nation's banking sector.

Such a deal could make the merged entity the No. 1 lender and one of the world's top 100 in terms of assets.

"But integration is my priority in the first half of the year," Tsai said. "We will not undertake further acquisition activity until integration is completed."

Evolving into a financial holding firm is also an option after the bank's takeover of Central Trust of China, which also has insurance and securities operations, he said.

Tsai did not give a clear time frame for the bank's future expansion plan.

As to whether the 100-percent state-owned Bank of Taiwan should be privatized, he said that would depend on government policy.

Tsai said he supported the idea of state-run banks adopting a private, professional management model, allowing them to take full control of decision-making relating to personnel and budgets.

This would help state banks become as efficient and competitive as their private rivals, he said.

Tsai added that the bank would endeavor to develop its wealth management business and set up footholds in emerging markets in Central and Eastern Europe to serve Taiwanese firms there.

The bank posted profits of between NT$13.5 billion (US$416 million) and NT$14 billion last year, compared with NT$15.2 billion in 2005.

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