Tue, Apr 03, 2007 - Page 12 News List

Fuhwa completes Yuanta merger

A NEW DIRECTION The group plans to develop into a brokerage-centric financial holding firm, with securities businesses contributing to over 70 percent of income

By Amber Chung  /  STAFF REPORTER

Fuhwa Financial Holding Co (復華金控), the nation's 11th-largest financial group by assets, said yesterday that it expects to return to profit with earnings of NT$8 billion (US$242 million) this year following its merger with Yuanta Core Pacific Securities Co (元大京華證券), Taiwan's biggest brokerage.

The drawn-out merger finally took effect yesterday. Yuanta had been delisted from the Taiwan Stock Exchange (TSE) in the meantime.

"We expect earnings per share to exceed NT$1 this year," Michael Ma (馬維辰), vice chairman of Fuhwa Commercial Bank (復華銀行), said on the sidelines of the merger ceremony yesterday.

The drivers for the renewed profitability come mainly from the lucrative securities arm, coupled with the banking unit's recovering financial condition, Ma said, who will be the chief operations officer of Fuhwa Financial in the future.

Fuhwa Financial incurred a loss of NT$3.08 billion last year, or negative NT$0.98 per share, due to mounting bad loans in its banking unit.

The ceremony attracted high-profile operators from the nation's financial sector, including Daniel Tsai (蔡明忠) who chairs Fubon Financial Holding Co (富邦金控), and Sean Chen (陳沖) who became chairman of KGI Securities Corp (中信證券) last month.

Fuhwa Financial will develop into a brokerage-centric financial holding firm, with the securities business contributing over 70 percent of income in future, with the remainder coming from its banking unit, said Victor Ma (馬維建), chairman of Fuhwa Securities Finance Co (復華證金).

Victor Ma will take over the presidency of the financial group in the second half of the year.

The company plans to undertake a NT$22 billion capital reduction from its brokerage arm after completing the integration between Yuanta Core Pacific Securities and Fuhwa Securities Co (復華證券) in September, Victor Ma said.

It would then inject up to NT$12 billion into the weaker banking unit in order to lift the capital adequacy ratio above 10 percent -- from the current 9.5 percent -- in order to facilitate the bank's overseas expansion.

The remaining NT$10 billion would be used to acquire targets locally and internationally in the securities and banking arena, but not problematic financial institutions recently taken over by the government, Michael Ma and Victor Ma said.

For its planned overseas expansion, the bank will target the Vietnamese market and leverage the footing already established by Yuanta through its close ties with Vietnam-based Taiwanese firms in order to tap into the fast-growing economy, Victor Ma said.

Victor Ma added that he expects overseas businesses to contribute 25 percent of the financial group's income within the next five years, compared to 15 percent currently at the Yuanta unit.

The company is also mulling whether to seek a strategic partnership with an overseas bank to introduce management and product know-how, Michael Ma said.

The merger means that Fuhwa Financial now leads the nation's brokerage market with a 12 percent share and has boosted its total number of outlets to 220.

Fuhwa Financial closed down 5 percent at NT$15.20 on the Taiwan Stock Exchange yesterday.

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