E. Sun Commercial Bank (玉山銀行) of Taiwan said it isn't interested in merging with rival Cathay United Bank (匯通銀行), and has set up a taskforce to examine its options amid a government drive to make lenders more efficient.
The less than 15 percent of E. Sun Commercial held by Cathay's parent, the Lin-Yuan group (霖園集團), isn't enough to force a merger, said Joseph Huang, a special assistant to the president of E. Sun.
"We have a team thinking about the future of E. Sun," Huang said in an interview. "We haven't begun talks with anyone" on a merger or takeover.
Taiwan's Parliament passed laws this year making it easier for the more than 50 banks and hundreds more financial companies and credit cooperative to merge by allowing them to form holding companies that can cover a range of businesses.
The Lin-Yuan group controls Cathay Life Insurance Co (
Vincent Wang, executive vice president at Cathay United Bank, said after he was told of Huang's comments, that the bank would still like to merge with E.Sun, Taiwan's 16th-largest bank by assets, though it may not happen for another "two or three" years.
A merger between the two banks would create the nation's 10th largest bank by assets, according to Bloomberg analytics.
E. Sun made an NT$1.41 billion profit (US$40.6 million) last year compared to a loss of NT$3.60 billion by Cathay United.
Taiwanese banks are struggling with rising non-performing loans as the economy grows at its slowest rate in more than 26 years.
Standard & Poor's said the non-performing loans at Taiwanese banks could be 10 percent of all credits. The costs of re-capitalizing the financial system because of rising non-performing loans could be as high as 50 percent of GDP, the ratings company said.
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