Fri, Jan 24, 2014 - Page 14 News List

Taiwan to set up regional bank

M&A DRIVE:The finance ministry announced plans to establish the nation’s first regional-scale bank in Asia to raise international competitiveness and expansion

By Amy Su  /  Staff reporter

Minister of Finance Chang Sheng-ford (張盛和) yesterday vowed to establish Taiwan’s first regional-scale bank in Asia within three years by pushing for a series of merger and acquisition (M&A) deals led by state-controlled Mega Financial Holdings Co (兆豐金控).

The ministry aims to see the first M&A deal by the end of this year by pressing for M&As among state-owned banks in the preliminary stage.

“We hope for Taiwan to have a bank brand with a considerable scale and scope [in the Asian region] in three years,” Chang told a press conference.

State-run Mega Financial, which operates Mega International Commercial Bank (兆豐國際商銀), has been seen as the most likely brand to become a regional-scale bank in Asia.

The financial holding company submitted an evaluation report to the ministry earlier this month, citing successful experiences for other major Asian countries that have created a regional-scale bank, including Hana Bank of South Korea, Maybank of Malaysia and DBS Bank of Singapore.

Learning from these experiences, Chang said the government has to play a leading role in the process of establishing a regional-scale bank, an indication that mergers between state-run banks may be a more possible and feasible option.

Chang added that Mega Financial may have to launch several mergers over the next few years by acquiring about three to five banks before it becomes a bank brand with significant scale and scope in Asia.

Chang said the establishment of a regional-scale bank in Asia may help Taiwan’s financial sector raise its competitiveness and solve the issue of there being too many banks while giving the nation’s corporations a foundation for overseas expansion.

However, Chang did not specify a concrete schedule for the M&As, and said the plan should become official government policy first.

Separately, the Ministry of Finance aims to raise tax revenue by urging local governments to adjust upward both the house taxation rate and standard house prices.

The ministry on Wednesday sent an official statement to all local governments asking them to raise the house taxation rate for non-occupied properties, expanding the difference between the tax rates for occupied and unoccupied properties.

Under the regulations, the house tax rate for occupied properties is set at 1.2 percent of the current value of building, with a local government capable of adjusting the rate for unoccupied properties between 1.2 percent and 2 percent.

However, most local governments choose to keep the house tax rate for unoccupied properties at 1.2 percent, the ministry said.

Following the official statement, the ministry will examine local governments’ efforts on property taxes as one of the principles to decide the amount of house budget the central government will distribute to them from this year.

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