E.Sun Financial Holding Co (玉山金控) yesterday announced plans to acquire Chu Nan Credit-Cooperative Association (竹南信用合作社) on behalf of its banking subsidiary, E.Sun Commercial Bank (玉山銀行), to expand its customer base and service network, a company executive said.
The acquisition, which still needs approval from both firms’ shareholders and the financial regulator, would cost E.Sun Bank NT$1.86 billion (US$62.84 million) in cash, E.Sun Financial president Joseph Huang (黃男州) told reporters.
“We expect the acquisition to add more than 100,000 customers to E.Sun Bank and increase its branches from 122 to 132,” Huang said. “The purchase is a bargain in light of Chu Nan’s assets and customer quality.”
Chu Nan posted a net income of NT$50 million last year, equaling NT$1 earnings per share for listed firms. The community-level lender has a net worth of NT$1.67 billion, with bad loan and coverage ratios standing at 0.32 percent and 297.92 percent respectively.
It owns 10 outlets in Greater Taichung and Hsinchu and Miaoli counties, serving mainly white-collar workers with stable incomes, Huang said, adding that E.Sun intends to move the offices to Taoyuan, Taichung and Tainan later.
E.Sun and Chu Nan plan to hold separate shareholders’ meetings late next month to approve the acquisition plan and file merger applications with the Financial Supervisory Commission in May, Huang said.
“We expect the consolidation to strengthen E.Sun’s wealth management and home loan operations, although the synergy benefits may not become evident until a year later,” he said.
The addition of 10 branches will make E.Sun Bank the ninth-largest from 12th by outlet number, and the third-largest if state-run peers are excluded, Huang said.
“We welcome all Chu Nan employees to stay on and help E.Sun expand,” he said, adding that he expected the integration to be smooth.
The acquisition resulted from months of negotiation and will not affect E.Sun Bank’s financial performance this year, Huang said.
The lender, the main source of its parent’s revenue, expects overall lending to grow 10 percent this year, driven by loan demand from small and medium firms as the economy recovers, he said.
E.Sun Bank also expects credit card and unsecured personal lending to expand substantially this year amid strengthening consumer confidence, Huang said.
The government’s plan to tax short-term property transfers will not seriously weigh on the lender’s mortgage operations as second home loans account for a tiny 5 percent of total mortgage lending, Huang said.
He said the ongoing nuclear crisis in Japan would have little impact either because Japan-related exposures is only approximately NT$500 million.
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