AMRO bid wins Taitung auction

ABN AMRO Bank won a government auction for troubled Taitung Business Bank (台東企銀) yesterday after a two-day bidding and negotiation marathon that started on Thursday.

With the acquisition of the Taiwanese bank, Netherlands-based ABN AMRO stands to become the third international bank to purchase a local bank, following its rivals Standard Chartered Bank and Citibank.

ABN AMRO won the auction by bidding around NT$6.9 billion (US$209 million) to absorb the troubled Taitung bank.

The offer was tens of millions of US dollars higher than the baseline price, said Johnson Chen (陳戰勝), president of the Central Depository Insurance Co (CDIC, 中央存保), which organized the sale.

ABN AMRO was the only bidder in the auction.

The deal is scheduled to be signed on Monday and the transaction could be completed within 100 days after the contract is signed, the CDIC and Taitung Business Bank said.

The acquisition will enable ABN AMRO to take over the Taitung bank's 32 branches, bringing the Dutch lender's number of local outlets to 37.

"This presents a tremendous opportunity for us to expand our services to our chosen client segments in areas convenient to them," Jeroen Drost, chief executive officer of ABN AMRO in Asia, said in a statement that was released yesterday.

Terms of the deal

Under the terms of the deal, the Dutch bank will be allowed to relocate 21 of the Taitung lender's outlets within the next five years.

ABN AMRO has been working hard to strengthen its footing in the small and medium-sized enterprise segments.

"The additional branches will enable us to accelerate our expansion program to this target group at a relatively low cost," Drost said.

In December last year, the CDIC took over debt-ridden Taitung Business Bank, which had a book value of negative NT$2.48 billion.

The lender's value further declined to negative NT$4.1 billion in April, government data showed.

The purchase will help ABN AMRO to compete against other foreign banks in Taiwan that have grown through mergers and acquisitions since last year.

Last September, Standard Chartered announced it would acquire Hsinchu International Bank (新竹國際商銀) in a deal that boosts the British bank's outlets from three to 86.

Citibank followed in April by announcing that it would buy out the Bank of Overseas Chinese (BOOC, 華僑銀行) to increase its number of outlets to 66.

"I think our acquisition target can bring us a large benefit," Victor Kuan (管國霖), Citibank Taiwan's business manager, said yesterday.

"Location, location, location," Kuan said of Citibank's growing number of outlets.

Adding branches

Adding branches is not necessarily meaningful if they are not in the right locations, he said, adding that 20 percent of BOOC's branches are located in the greater Taipei area, while the reminder are evenly scattered across the country.

Citibank hopes to officially take over BOOC in the third or fourth quarter this year, Citi Taiwan official Morris Li (利明獻) said.

"The turnaround story is a key point," Li said. "The sooner a bank can successfully complete its integration, the bigger the competitive edge it can gain."