Tue, Mar 20, 2012 - Page 11 News List

Financial consolidation plan received positively

TIME IS RIGHT:Financial holding companies welcomed the Cabinet’s push for integration, saying that it would strengthen the sector by streamlining the competition

By Crystal Hsu  /  Staff Reporter

The Cabinet’s plans to ease legal barriers to pave the way for the consolidation of the nation’s banking sector drew a positive response from private and state-run financial institutions.

Chinatrust Financial Holding Co (中信金控), the nation’s third-largest by assets, said on Sunday the company was interested in acquiring state-run peers if they were open to integration.

“Talks of consolidation will be meaningless unless the government agrees to auction off state-run financial institutions since they account for more than 50 percent of the total assets in the sector,” Chinatrust Financial president Daniel Wu (吳一揆) said.

Wu’s comments came after Premier Sean Chen (陳冲) told the legislature on Friday that the banking sector is in top condition — judging by its bad loan and capital adequacy levels — and now would be the best time for consolidation.

To facilitate integration, the Cabinet is reportedly drafting a bill that would remove a requirement that financial institutions in which the government holds at least a 10 percent stake brief the legislature on their merger-and-acquisition plans.

Financial institutions with a government stake of more than 10 percent include Mega Financial Holding Co (兆豐金控), Hua Nan Financial Holdings Co (華南金控), First Financial Holding Co (第一金控), Taiwan Cooperative Financial Holding Co (合作金控) and Taiwan Financial Holding Co (台灣金控).

Newly installed Minister without Portfolio Kuan Chung-ming (管中閔) is said to be in charge of the liberalization plan.

The government had previously shied away from consolidation talks because of political considerations.

Chinatrust Financial welcomed renewed efforts to cut the number of financial institutions in the country, no matter which companies survive or cease to exist, Wu said.

Taiwan has the highest bank density — measured as a ratio of population and geographic area served — and the lowest interest margins in Asia because of the intense competition.

Taiwan Cooperative Financial chairman Liu Teng-cheng (劉燈城) agreed on the merits of consolidation, saying on Saturday that the healthy quality of its assets would make integration easier and safer.

Liu said he would support the government if it desired an integration between the company and other institutions.

On the Taiwan Stock Exchange, the financial sector scored the highest gains among the eight major categories, ending up 0.4 percent versus the benchmark TAIEX’s 0.14 percent decline.

Shares of Taiwan Cooperative Financial increased 1.33 percent to NT$19, Chinatrust Financial rose 1.31 percent to NT$19.3 and First Financial climbed 1.1 percent to NT$18.35. Mega Financial fell 0.93 percent to NT$21.4, while Hua Nan Financial shares were unchanged at NT$17.5, stock exchange data showed.

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