ABN AMRO Bank NV yesterday inked an agreement with the Central Depository Insurance Co (中央存保) to acquire the troubled Taitung Business Bank (台東企銀), hoping to generate profits on the deal within the next 12 months in the wake of an official takeover in September, an executive said yesterday.
"We will invest a lot of money in the initial stages for relocation and implementation [of integration]. Yet we hope to turn profitable on the acquisition within the next year after taking over the Taitung lender in September," Terry King (經天瑞), ABN AMRO's corporate executive vice president in Taiwan, said after the contract signing ceremony yesterday.
King declined to comment on the potential amount of money they would need to pour into the local bank.
Last Friday, ABN AMRO agreed to pay NT$6.9 billion (US$209 million) to take control of Taitung Business, which was taken over by the government in December, amid an accelerating race for expansion through mergers and acquisitions among foreign banks in Taiwan.
The Taiwan branch of the bank incurred a loss of NT$3.4 billion last year due to industry-wide consumer credit problems. For the first four months of this year, the bank remained NT$386 million in the red, according to government data.
The bank turned profitable last month, King said.
"We are and we will" continue to be profitable, he said.
The takeover is part of the Dutch lender's expansion plans in Asia, where it has an aggressive target of tripling its business in the region in the next five years, the bank said.
King said an integration task force has been set up and it expected to complete the first stage of the integration of the local lender by the end of this year.
"The sooner we finish, the quicker we will see the return," he said.
The transaction will bring ABN AMRO's number of outlets to 37 from the five branches it now has nationwide. The bank will be allowed to relocate a majority of Taitung Business' branches within the next five years.
The bank agreed to acquire the local rival to enhance its scale in Taiwan, said Jeroen Drost, chief executive officer of ABN AMRO Asia.
"We are happy with the 37 outlets in Taiwan and will focus on the integration work [at the moment]," Drost said, remaining tightlipped about any further acquisition plans.
More than 10 of Taitung Business' branches will be re-branded to ABN AMRO by year's end. The Dutch lender said it hopes the deal can help strengthen its footing in the nation's wealth management and small and medium enterprise sectors.
The bank will target the mass market rather than the high net worth customer segment it has targeted until now.
"We will become a local bank. We want to be localized," King said.
Last September, Standard Chartered announced it was buying Hsinchu International Bank (新竹國際商銀) to boost its outlets across the nation to 86. Not to be outdone, Citibank announced in April that it would take over the Bank of Overseas Chinese (
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