1st Taiwan commercial bank merger in 6 years approved
April 9, 2014, 12:14 am TWN
TAIPEI, Taiwan -- China Development Financial Holding Corporation's (中華開發金控) NT$23 billion (US$763 million) acquisition of Cosmos Bank (萬泰銀行) was approved by the two institutions' shareholders Tuesday.
China Development Financial, which looks set to acquire a commercial banking license through the merger, will own Cosmos Bank outright in the deal that is expected to be completed by the end of July.
Once completed, the deal will be Taiwan's first merger involving a listed commercial bank in nearly six years.
At present, China Development Financial's only banking unit is China Development Industrial Bank, which focuses primarily on investment and corporate banking.
China Development Financial Executive Vice President Eddy Chang (張立人) said the merger will offer his company considerable room for growth and lower its capital acquisition costs.
He projected that the merger will increase the banking business's contribution to the financial holding company's profits to about 40-50 percent in the future, with another 30-40 percent coming from subsidiary KGI Securities and the remaining 20-30 percent coming from direct investments.
Chang expected Cosmos Bank's net worth to increase from NT$18 billion at the end of 2013 to NT$50 billion-NT$60 billion within a year through the transfer of the industrial bank's corporate finance and treasury marketing businesses to Cosmos Bank.
The synergies from the merger will be evident within 2-3 years as Cosmos Bank picks up deposits from securities accounts and payroll transfers, lowering its cost of capital, Chang said.
The merger received strong support from the shareholders of both institutions. Nearly 80 percent of the votes from China Development Financial shareholders and just over 90 percent of the votes of Cosmos Bank shareholders backed the move.
But Cosmos Bank employees were not as supportive, with the bank's union considering a strike over concerns about the rights of the bank's employees under a new parent company.
Chang said the financial holding company was planning to transfer around 200 employees from the group's industrial bank to Cosmos Bank, but he pledged that there would not be any layoffs at Cosmos Bank for one year.
He said he respected the union's right to strike but would continue communicating his company's desire to work together with Cosmos Bank employees.
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