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Foreign banks eye struggling local lenders

Foreign banks have shown great interest in buying troubled lenders taken over by the government in order to expand their franchises in Taiwan, the Central Deposit Insurance Corp (CDIC, 中央存保) said yesterday, after a report said ABN AMRO Bank Taiwan would participate in an auction on Thursday.

"We have received excited responses from interested buyers, including some international banks in Taiwan," Johnson Chen (陳戰勝), president of CDIC, which is responsible for organizing the sale, said in a telephone interview yesterday.

Chen declined to name the potential foreign bidders, citing confidentiality.

The Chinese-language Economic Daily reported yesterday that ABN AMRO would bid for Enterprise Bank of Hualien (花蓮企銀) in competition with six local rivals on Thursday and for Taitung Business Bank (台東企銀) against one local competitor on June 7.

The two local lenders have 31 branches nationwide each.

The winner in the bid for the Hualien-headquartered bank will be announced after 2pm on Thursday, the CDIC said.

ABN AMRO Taiwan's public affairs official Edward Lee (李以仁) said the bank had no comments about the report.

In an interview with the Taipei Times last month, Chen said that renowned overseas banks were particularly interested in the auctions, as buyout of local lenders by two of their foreign rivals in Taiwan had made expansion more urgent than ever.

Standard Chartered Bank will become the international bank with the largest branch network in Taiwan -- with 86 outlets, up from three -- after it officially takes over Hsinchu International Bank (新竹國際商銀) at the beginning of the second half of this year.

Not to be left behind in the race for expansion, Citibank announced the acquisition of the Bank of Overseas Chinese (華僑銀行) last month to boost its outlet number six-fold to 66 and make the US bank the biggest foreign lender in Taiwan by assets.

Uncertainty is likely to cast a shadow on the auctions, however, after the labor unions at the Enterprise Bank of Hualien and Taitung Business Bank agreed last weekend to go on strike in the hope of negotiating for longer job guarantees and better compensation schemes.

Despite the potential impact on the bidders' interest, Chen said they would continue to communicate with the unions and the sale would take place as planned.

Meanwhile, EnTie Commercial Bank (安泰商業銀行) said in a filing yesterday they were open to forming strategic partnership with foreign rivals after a report claimed that Carlyle Group could pour NT$17.5 billion (US$525.9 million) of fresh capital into the local lender.

EnTie, which plans to raise NT$22.5 billion to improve its financial structure, will obtain NT$5 billion in funds through new share sales -- mainly from existing shareholders via private placement -- at NT$8 per share at the end of next month.

The cash-strapped bank has been linked to a number of interested investors, including ABN AMRO, HSBC Ltd and the Orix Group of Japan.

Unmoved by the news, EnTie shares closed down 1.88 percent at NT$7.85 in the Taiwan Stock Exchange yesterday.
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