Far Eastern International Bank (
The news sent the bank's stock up by its daily 7 percent limit yesterday.
"We are looking for a foreign bank," said Chang Yi-pien (張以邊), the bank's vice president yesterday. "Because they will bring us more modern technology and know how."
The bank has met with "one or two" foreign banks to "explore opportunities, just as anyone would before entering into any long-term relationship," Chang said.
The biggest incentive behind merging with foreign banks is their superior technology and "better synergy and fit" since most domestic banks are highly similar in business scope and operations, he said.
The report, however, pushed the shares of new banks higher yesterday, although the major banks moved on strong government buying, analysts said. Far Eastern Bank jumped from NT$4.0 to NT$4.30 yesterday, up by its daily 7 percent limit.
"The bank is trading at an unjustifiably deep discount," says Bruce Richardson, head of regional bank research at Indosuez W.I.Carr in Taipei. "Although it is not earning great return on equity, it is a well-run bank."
Another analyst at a major financial institution, however, said that the reports of the merger and the jump in the stock price may not be directly related. "There are many good banks at a equally cheap price."
Far Eastern Bank is one of the 16 so-called new banks.
Far Eastern is the first among the new banks to have come out with a statement on merging with foreign counterparts. Among the bigger banks, Chinatrust Bank (中信銀), has said it will take two to three months before it merges with another local counterpart.
The Financial Institutions Merger Act (FIMA) -- which was passed on Friday -- lays the legal groundwork for consolidation in the financial sector.
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