Sat, Aug 18, 2007 - Page 12 News List

Land Bank's Tsai to concentrate on bank merger

FINANCIAL GIANT The government's plan to merge the three banks into one financial holding firm is part of its efforts to consolidate the industry

By Jessie Ho and Kevin Chen  /  STAFF REPORTERS

The Land Bank of Taiwan (土地銀行), the nation's third-largest bank by assets, will push forward the establishment of a government-proposed financial holding firm and ensure employee interests in the process of merger, president Tsai Ching-nain (蔡慶年) said yesterday during a handover ceremony when he formally replaced Chang Yi-hsuing (張義雄) as the president of the state-run bank.

Tsai, previously the director-general of the National Treasury Agency, was appointed to the post by the Ministry of Finance last month.

Tsai said the first task facing him would be how to facilitate the planned merger with Bank of Taiwan (台灣銀行) and the Export-Import Bank of the Republic of China (中國輸出入銀行), to be called Taiwan Financial Holding Co (台灣金控), by the end of the year.

"It is a set target ? and we will ensure we consider the interests of our employees in the process," Tsai said.

The Cabinet announced the merger proposal on Wednesday.

While many have criticized the formation of the nation's largest financial holding company saying the large size would not create efficiency, Tsai said the new holding company would yield synergies and help enhance the competitiveness of the banking sector by introducing enterprise management.

The full integration of the three banking units is expected to take three years, Deputy Minister of Finance Liu Teng-cheng (劉燈城) said on Wednesday.

Taiwan Ratings Corp (中華信評), the local arm of Standard and Poor's Ratings Services, said in its latest report that its ratings on Land Bank of Taiwan would not be immediately affected by the government-proposed merger.

Taiwan Ratings in May affirmed its "twAA+" long-term and "twA-1" short-term credit ratings on Land Bank of Taiwan with a stable long-term outlook rating.

"Land Bank's credit profile could be positively affected if concrete signs of the implementation of the proposal, particularly the establishment of the financial holding company, emerge," Taiwan Ratings said in the report.

Tsai hopes to expand Land Bank's lending business and increase fee income through a network of about 156 branches, he said.

The new president also anticipates further enhancements to its electronic banking systems and the integration of various of its products to meet the demand of customers.

The government's plan to merge the three wholly-owned state banks into one financial holding firm is part of its efforts to consolidate the finance industry in the wake of increased foreign competition.

The ministry also plans to sell shares the government holds in other financial holding companies where it does not have a controlling stake, such as Waterland Financial Holdings Co (國票金控), China Development Financial Holding Co (中華開發金控) and Fuhwa Financial Holding Co (復華金控), as well as to speed up the merger between Chang Hwa Commercial Bank (彰化銀行) and Taishin Financial Holding Co (台新金控).

The Chang Hwa Union, however, yesterday called on the ministry to suspend ongoing merger preparations between Chang Hwa and Taishin Financial, owner of the nation's third-biggest credit card issuer.

Taishin Financial, which owns 22.5 percent of Chang Hwa, plans to acquire the remaining 77.5 percent through a share swap that would turn Chang Hwa into a wholly owned unit this year and create the nation's second-largest financial services firm by assets.

In a statement released yesterday, the union said it planned to voice its anger at the planned share swap and would submit a petition to the Ministry of Finance on Thursday.

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