Finance minister Yen Ching-chang (
"The surviving institution should have a combined market share of 15 percent after the merger," Yen said.
Since these state-banks are currently listed companies, the plan must be disclosed by the banks involved via the Taiwan Stock Exchange and can only be announced after the various boards meet to inform stockholders.
Candidates for the merger are the long-rumored combination of Chiao Tung Bank (交通銀行), United World Chinese Commercial Bank (世華) and International Commercial Bank of China (中國國際商銀).
Yen said that 12 government-controlled banks should be consolidated into three to five banks in a bid to reform Taiwan's financial operations beleaguered by soaring non-performing loans and overbanking.
During a radio interview on Sunday afternoon, Yen said that the merger would be among eight state-controlled banks. "Taiwan Cooperative Bank (合作金庫) has recently decided to merge with Chinfon Commercial Bank (慶豐銀行).
"The previous merger proposal for Bank of Taiwan (
"Not including the four above-mentioned banks, there are eight state-controlled banks, including First Commercial Bank (
The combined non-performing loans for domestic banks, excluding grassroots units, climbed to a record high of NT$776.47 billion (US$24.4 billion), or 5.5 percent of total loans as of the end of October.
Grassroots institutions posted a combined non-performing loan ratio of some 16 percent in October.
The parliament in November passed a bill allowing mergers and acquisitions of financial institutions.
The new law offers tax incentives to encourage mergers and takeovers among Taiwan's banks, securities firms and insurance companies, as well as financial units of grassroot credit cooperatives and fishermen's and farmers' associations.
It also allows foreign banks to acquire local banks and authorizes the finance ministry to force mergers or appoint new management to ailing institutions.
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