Stock of Overseas Bank falls in spite of takeover news

"We have been proceeding aggressively with the negotiations in recent days."

Weng Chien, bank spokesman

Shares of the Bank of Overseas Chinese (華僑銀行) weakened slightly yesterday in spite of local media reports that the lender had finally agreed to Citibank's drawn-out buyout offer of NT$14.2 billion (US$430.7 million).

The Bank of Overseas Chinese closed down 0.92 percent at NT$10.80 on the over-the-counter Gretai Securities Market yesterday.

The lender, a small-sized commercial bank with 55 branches in Taiwan, yesterday confirmed it was in talks with Citibank about the 100 percent buyout offer, but declined to comment on the price or the issues that have delayed the deal.

Bank spokesman Weng Chien (翁健) said yesterday that both sides had not yet reached an agreement.

"We have been proceeding aggressively with the negotiations in recent days," Weng said in a telephone interview.

He said he could not confirm if the deal would be completed before the Lunar New Year holiday beginning next Saturday.

The Chinese-language Economic Daily News reported yesterday that Citibank had agreed to acquire the local lender at between NT$11.9 and NT$12 per share, making the Bank of Overseas Chinese the second Taiwanese bank to be taken over by a foreign lender since September last year.

On Sept 29, Standard Chartered Bank of the UK announced it would purchase between a 51 percent and 100 percent holding in Hsinchu International Bank (新竹國際商銀) at NT$24.5 per share through a recommended tender offer, valuing the nation's seventh-largest private sector bank by loans at NT$40.5 billion.

The Bank of Overseas Chinese was 33 percent owned by Polaris Group (寶來集團), giving the group effective control of the bank with 12 of its 15 board seats.

With a stake of approximately 11 percent, the Cabinet's Development Fund (開發基金) is the bank's second largest shareholder, followed by New York Life Insurance with around 5 percent.

If the financial regulator approves the bank's sale to likely buyer Citibank, it would boost Citibank's number of outlets in Taiwan to 66 from its current 11.

The proposed deal would also increase the number of Citibank credit cards in circulation to 2.2 million from its current 1.7 million, while adding an extra 1 million deposit accounts to the foreign lender's existing 200,000 deposit clients, the report said.

The report, without citing anyone, said the transaction would have been wrapped up in the middle of last year, but dragged on longer than expected because Citibank hoped to hammer out a complete integration plan before making any final announcement.

Citibank reportedly planned to delist the Bank of Overseas Chinese from the local bourse and turn it into a wholly owned subsidiary in Taiwan, it added.