The nation's fourth-largest commercial bank plans to merge with two smaller players to form an institution that will command roughly 9 percent of the domestic banking sector, finance officials said yesterday.
First Bank (
"After conducting an evaluation of their businesses ... the chairmen of the three banks signed a memorandum of understanding today in my office," Yen said.
The merger is a part of the government's plan to encourage consolidation in the troubled financial industry as Taiwan prepares for stiffer competition expected to accompany WTO entry.
In December, Taiwan Cooperative Bank
Analysts hailed the latest merger as paving way for more consolidation in the banking sector, although they believe it is too early to judge whether fewer and bigger players will help cure the industry of its bad loan problem.
"It is not clear whether it will really improve anybody's situation," said one analyst at a foreign investment bank, who requested anonymity. "The merged bank will not be significantly bigger than First Bank, because Pan Asia and Dah An are relatively small."
The government last year passed a financial institutions merger law to help encourage tie-ups in the banking sector, which many analysts believe is dangerously overcrowded.
Premier Chang Chun-hsiung (
Pan Asia Bank and Dah An Bank are relatively new, having been founded in 1992 when the government issued licenses to 16 new banks. First Bank, considered to be one of the "Big Three" state-owned banks, celebrated its centenary last year.
The three-to-one merger is seen as a vote of confidence in the government's bid to reduce the number -- and enlarge the size of -- financial institutions.
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