Fri, May 08, 2015 page14

• FSC moves to encourage M&As in financial sector

  CONSOLIDATION DRIVE: The measures are aimed at thinning out the number of financial institutions and turning some into regional powerhouses, the FSC said

  • By Amy Su / Staff reporter
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  The Financial Supervisory Commission (FSC) plans to unveil a scheme by the end of the month aimed at stimulating merger and acquisition (M&A) deals among the nation’s privately owned financial institutions, after facing difficulties in its attempts to promote M&As among state-run financial institutions.

  The commission is to adjust some regulations to achieve the goal, allowing private firms to buy their peers through public tenders, FSC Chairman William Tseng (曾銘宗) said on Wednesday.

  “The nation has too many financial institutions,” Tseng said at a question-and-answer session during a meeting of the legislature’s Finance Committee.

  There might be some preconditions for M&As between privately owned firms, Tseng said.

  For instance, a potential acquirer would need to secure more than half of the stock of a company that is the object of a takeover, he said, adding that this requirement should be able to avoid the kind of controversy created by the deal between Chang Hwa Commercial Bank (彰化銀行) and Taishin International Bank (台新銀行).

  In 2005, Taishin Financial Holding Co (台新金控) outbid six competitors to take a controlling 22.5 percent stake in then-debt-ridden Chang Hwa Bank, becoming the state-run bank’s largest shareholder. However, hostility between the two has been growing over the past 10 years, as the Ministry of Finance is against Taishin Financial’s goal of merging Taishin International Bank with Chang Hwa Bank.

  Tseng said that interested parties such as banks, insurers and stock brokerages could start filing their M&A applications with the commission next month.

  The nation now has 39 banks, with state-run banks making up nearly 50 percent of the total. However, as the revenue of state banks only accounts for 35 or 36 percent of the total for the banking sector, the commission aims to address the shortfall by pushing for M&A deals among them, but it has encountered opposition to the policy, mainly from unions, which dislike mergers due to fears of job losses.

  “Compared with M&As among state-run banks, it should be easier for two private firms to come up with a merger deal,” Tseng said.

  However, Tseng said the pace of M&As in the nation’s financial sector must keep pace with the sector’s overseas expansion, in line with the commission’s ultimate goal of developing some domestic banks into regional powerhouses.

  In his view, Cathay Financial Holding Co (國泰金控), Fubon Financial Holding Co (富邦金控), CTBC Financial Holding Co (中信金控) and Yuanta Financial Holding Co (元大金控) are the domestic players with the most potential for joining the “Asia League,” because these firms have significant assets, strong product development capability and more overseas affiliates than their peers, Tseng said.
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