First Commercial Bank (第一商銀), Taiwan's third-biggest publicly-traded lender by market value, said it will pursue a merger with Pan Asia Bank Co (泛亞銀行) after talks for a three-way combination with rival Dah An Commercial Bank (大安商銀) stalled.
Merger talks ended after Dah An didn't supply relevant financial information by a June 30 deadline, First Commercial Vice President Tsai Jer-shyong said. Dah An denied the claim and said it is still interested in a tie-up, though it's also looking at combinations with other lenders.
``We're not married or engaged yet so we can talk to anybody,'' Dah An spokesman John Lee said.
He added the bank intends to evaluate the matter further after the share-swap basis is set by the accounting consultancy firm assigned by the two other banks.
The three banks signed a memorandum of understanding and announced the merger in February. However, Dah An Bank has been unable to agree with the other two banks on the ways of working out the swap of shares and asset evaluation methods necessary for the merger.
The problems in combining state-controlled First Commercial, the nation's oldest bank, and nine-year-old Dah An underline the challenges Taiwan faces in getting its more than 50 banks and 300 other lenders to combine into fewer, stronger institutions. The Chinese-language media earlier reported Dah An may be seeking a partner outside the nation.
``Dah An may be interested in a merger with a foreign bank to get a better price in the short term and better development in the medium and long term,'' said Katherine Chen, who manages NT$800 million (US$23 million) in Taiwan stocks at International Investment Trust Co. ``If the new banks merge with local banks, they would have to take on the problems and debts of less effective banks.''
First Commercial, with a market value of NT$69 billion, would have dominated the combination with Dah An, valued at NT$9.3 billion, and Pan Asia, which has a market value of NT$3.3 billion.
The three banks first announced plans to combine in February, and the process was forecast to take six months.
First Commercial will proceed with its takeover of Pan Asia and expects to sign a pact between August and September, Tsai said. Dah An won't be able to join the banks until they've completed their merger, he said.
``Dah An didn't comply with the requirements,'' Tsai said.
``The result is the merger is now between two banks.'' Dah An said there were no deadlines for the provision of information and it could still merge with First Commercial, which traces its roots back to 1899 and is viewed as one of the nation's ``big three'' commercial banks along with Hua Nan Commercial Bank and Chang Hwa Bank.
First Commercial shares fell NT$1, or 5.1 percent, to NT$18.80. Dah An fell 15 NT cents, or 2.4 percent, to NT$6, and Pan Asia fell 4 NT cents, or 1.8 percent, to NT$2.25.
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