Bank of Panhsin (板信銀行) yesterday completed its acquisition of the Ninth Credit Cooperative of Taipei (台北九信), allowing the medium-sized lender to expand its mortgage and wealth management operations and benefit from rebuilding old branch offices in the capital, senior executives said yesterday.
The New Taipei City-based bank agreed in October last year to acquire the financially moribund cooperative with its 18 branches for NT$3.98 billion (US$132.5 million) — NT$1 billion higher than its assessed value — attracted in part by its nine self-owned branch offices spread across Taipei, Bank of Panhsin president Cheng Ming-kun (鄭明坤) said.
The generous premium encouraged other grassroots financial institutes to approach Panhsin for merger talks, Cheng said.
Cooperatives have hit a bottleneck in growing profit over the past decade, as they cannot engage in commercial banking, real-estate financing or sales of wealth management products due to regulatory restrictions, Cheng said.
Panhsin, whose number of branches increases from 46 to 64, expects revenue to hit NT$1.2 billion this year after setting aside provision costs of up to NT$400 million to meet the new capital requirement, Cheng said.
The earnings forecast suggests a drastic retreat from last year, when net profit stood at NT$1.89 billion, company data showed.
Panhsin expects the new branches to double earnings next year and break even in three years’ time, Cheng said.
“The target is achievable, since it is easier for banks to make money in Taipei than elsewhere,” Cheng said.
Prior to the integration, Panhsin had just six branches in the capital.
Panhsin is retaining all 200 Ninth Cooperative employees, saying they can help the bank with its more diversified businesses and product lines.
The integration of the cooperative should also lower Panhsin’s overall exposure to real-estate-linked loans. The bank is on the Financial Supervisory Commission’s watch list and must bring its exposure below the 30 percent cap by the end of the year, from 31 percent now and more than 40 percent in 2012.
Panhsin is also to increase lending to small and medium-sized enterprises in light of the government’s continued effort to cool the property sector, company spokesman Simon Fang (方嘉男) said.
The bank is not interested in doing business with large corporations because such loans generate very low interest income and often have no collateral, Fang said.
When the timing is right, Panhsin plans to renovate the branches near MRT stations, Fang said.
The bank plans to keep the ground floors of these offices for its own use and sell the rest — a venture that should bring generous profits, given a scarcity of prime real estate in the city, he said.
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