Commercial banks may seek consolidations: minister

The minister, at a question and answer session at the Legislative Yuan yesterday, said that Chang Hwa Commercial Bank (彰化銀行), Land Bank of Taiwan (土地銀行) and Taiwan Business Bank (台灣企銀) are the three banks that have not yet begun any consolidation projects with other banks.

Chang Hwa Commercial Bank and Taiwan Cooperative Bank (合作金庫銀行) discussed possible consolidation moves two years ago, the minister said. But according to Chang, a consolidation of the two banks in the future is unlikely.

The minister said the Central Trust of China (中央信託局) and Bank of Taiwan (台灣銀行) have consolidated into the Taiwan Financial Holding Co. (台灣金控), Taiwan Cooperative Bank and Farmers Bank (農民銀行) integrated into Taiwan Cooperative Financial Holding Co. (合作金控), and the Bank of Communications (交通銀行) and the International Commercial Bank of China (ICBCC) have now been brought under the umbrella of Mega Financial Holding Co. (兆豐金控).

State-owned Bank Consolidations

Kuomintang Legislator Lu Shiow-yen (盧秀燕) said the government has been conservative in attempts to consolidate state-owned financial institutions.

The minister said that to secure the profit margin for state-owned commercial banks, it is more likely that state-owned commercial banks will choose to integrate with other state-owned institutions instead of private commercial banks.

State-owned commercial bank consolidation deals are likely to generate maximum profits for the nation, and consolidation deals between two state-owned commercial banks will not affect the shareholders of the banks, according to the minister.

Regarding the possibility of a consolidation among Land Bank of Taiwan (土地銀行), Chang Hwa Bank (彰銀) and Taiwan Business Bank, Wang Yao-shing (王耀興), chairman of the Land Bank of Taiwan, said the bank 100 percent belongs to the government, so it relies on the Ministry of Finance's approval to begin talks toward consolidation.

Chang Hwa Bank President Daniel Tarng (唐楚烈) said his institution had considered consolidation in the past, but the concept had not moved beyond mere discussion.

Taiwan Business Bank Chairman Liao Tsan-chang (廖燦昌) said his bank currently does not have any plans for consolidation deals.

Tax Reductions

The Financial Supervisory Commission (FSC) requested a reduction to the current futures transaction tax rate, the commission said. The FSC said the current tax rate is 0.004 percent, but the commission hopes to see a reduction down to 0.001 percent. The finance minister said the ministry currently is not considering removing the taxation on futures transactions.

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