an Cooperative Bank as its seeks to consolidate the over-crowded industry, a Cabinet official said yesterday. Among banks in which the government has at least majority control, "we plan to keep two large ones in principle and will dispose of our shares in the rest," Government Information Office Minister Shieh Jyh-wei said in a phone interview in Taipei. The government has revived a plan to urge mergers in a fragmented market where more than 40 local and 30 foreign banks, as well as hundreds of credit associations, compete to serve 23 million people. Taiwan controls about half of the island's banking assets through its ownership stakes.
"The plan certainly will interest large private financial holding firms like Cathay and Shin Kong, who surely want to grow larger and M&As are the quickest way for them," said Murphy Huang, who manages NT$4 billion in assets for PCA Securities Investment Trust Co. in Taipei.
The government would hold onto wholly owned Bank of Taiwan and majority-owned Mega Financial Holding Co., Shieh said. Bank of Taiwan is considered a policy bank whose interest rates serve as industry benchmarks. Mega Financial's banking unit has branches abroad that dispense salaries to overseas government workers.
The island's government also owns a majority of Taiwan Business and Hua Nan Financial Holding Co. Taiwan Business Bank would be merged with Mega Financial, without giving a timetable, Shieh said, and another bank it wholly owns, Land Bank of Taiwan, would be combined with Bank of Taiwan.
Shieh said the government hasn't decided when or how it will sell its more than 22 percent stake in First Financial and nearly 40 percent holding in Taiwan Cooperative.
Their large networks may draw suitors. First Financial's First Commercial Bank unit has Taiwan's second-largest branch network of 185 outlets, after Taiwan Cooperative's 293, central bank data shows.
The newspaper reported today the government needs to own only two state banks each with a 10 percent share of the market, citing Vice Premier Chiou I-jen.
