State-run Mega Financial Holding Co (兆豐金控) said yesterday it plans to grow into a regional international bank in three to five years and favors the acquisition of life insurance and consumer banking units as a way to improve its operation and product lines.
Mega Financial, approximately 22 percent of which is controlled by the government, is waiting for the Ministry of Finance to approve expansion plans, which may be better clarified during the spring legislative session, company chairman McKinney Tsai (蔡友才) said.
“Currently, we stand somewhere between a local international financial service provider and a regional international one,” Tsai said.
The buyout targets may come as a surprise after media reported possible mergers between Mega Financial and state-run First Financial Holding Co (第一金), as well as between Hua Nan Financial Holding Co (華南金) and Taiwan Cooperative Financial Holding Co (合庫金), Tsai said.
The speculations came after the Financial Supervisory Commission and the Ministry of Finance named Mega Financial as the best candidate to become a serious regional player and said consolidation is easier among state-run companies.
Tsai disagreed, saying that synergy benefits should guide consolidations instead.
With an emphasis on cross-border trade financing, Mega Financial is somewhat lacking in life insurance and consumer banking operations so it should be atop the acquisition agenda and the search should not be limited to state-run peers, Tsai said.
In line with the strategy, flagship subsidiary Mega International Commercial Bank (兆豐國際商銀) has focused on expansions abroad and has not added a new branch at home for the past decade, Tsai said.
Consequently, overseas and offshore banking unit operations generated 64.17 percent of the group’s net income last year of NT$22.47 billion (US$740.56 million), or NT$1.96 earnings per share, an increase of 4.5 percent from a year ago, company data showed.
Mega Financial’s net profit was behind Fubon Financial Holding Co (富邦金控) and Cathay Financial Holding Co (國泰金控), as was its market value.
Tsai declined to give business guidance for this year except to say that Mega Financial planned to raise its registered capital and that the exact amount still under discussion. The increase is intended to support the introduction of a strategic partner, he added.
Mega Financial’s shares ended flat at NT$24.25 percent yesterday, weaker than overall trading on the TAIEX, which closed with a 0.95 percent gain, according to Taiwan Stock Exchange data.