Yuanta Financial Holding Co (元大金控) has booked bargain purchase gains of NT$5.64 billion (US$188.14 million) linked to the acquisition of South Korea’s Tongyang Securities Inc, raising its cumulative earnings above the NT$10 billion mark as of July.
The securities house-oriented conglomerate had earlier posted NT$6.94 billion in net income for the first seven months, but the figure has climbed to NT$12.58 billion, with the company earning above the NT$10 billion mark for the first time in three years, amid lowered daily turnover in the local bourse.
Over the past three years, local daily trading totals have been light, hovering near NT$80 billion, affected by the debt crisis in Europe and the issue of domestic capital gains taxes.
The deal came as the company’s main subsidiary, Yuanta Securities Co (元大寶來證券), bought a majority stake in the cash-strained South Korean peer for NT$7.84 billion in May. It expects to complete the integration this quarter.
A detailed pricing examination showed that the deal generated NT$5.64 billion in bargain purchase gains, Yuanta Financial said, reiterating its confidence that the new unit can turn profitable beginning next year.
Yuanta Financial is the second domestic financial services provider to book bargain purchase gains this year. In June, CTBC Financial Holding Co (中信金控) recorded a bargain purchase gain of NT$14.81 billion after integrating Tokyo Star Bank.
The Financial Supervisory Commission has encouraged local financial institutions to increase their scale through overseas mergers and acquisitions to become so-called “regional champions.”