The Financial Supervisory Commission yesterday approved plans by CTBC Bank (中信銀行) to buy Tokyo Star Bank for ￥53 billion (US$520.2 million), in the first takeover of a Japanese commercial lender by a foreign bank.
The approval came one month after the commission placed an investment ban on the bank, the main subsidiary of CTBC Financial Holding Co (中信金控), because of its attempt to hide its control of a Shanghai-based company from its board and the financial regulator.
At that time, the commission imposed NT$10 million (US$332,000) of fines on CTBC and said it would not approve any of CTBC’s planned new investments, including the Tokyo Star plan, until the firm changed its internal control and disclosure systems.
“The commission decided to give the go-ahead because CTBC Bank has since strengthened internal oversight,” FSC banking bureau deputy director-general Jean Chiu (邱淑貞) said by telephone.
CTBC Bank, Taiwan’s largest credit card issuer, will gain full control of its Japanese peer, allowing it to tap retail banking and cross-border financing opportunities across East Asia, the commission said.
With assets standing at ￥2.5 trillion, Tokyo Star has 31 outlets and 1,200 employees.
The Japanese bank has a relatively strong presence in the retail market, the commission said.
The investment ban will remain in place for another year, although CTBC Bank may seek organic growth by opening new branches overseas during that period, Chiu said.
The Tokyo Star deal still requires regulatory approval in Japan.
The commission is also to make an exception for the acquisition of Taiwan Life Insurance Co (台灣人壽) by CTBC Financial since the deal took place prior to the investment ban, Chiu said.
CTBC Financial and its banking arm may incur heavy compensation costs if they fail to carry out the buyout agreement, local media said.
The 66-year-old Taiwan Life has total assets of NT$430 billion, and the acquisition would make the buyer’s life insurance subsidiary the eighth-largest among its domestic peers.
Quick FSC approval is likely to help settle the matter, although some shareholders in Taiwan Life are seeking to invalidate the acquisition deal through lawsuits.