Regulators likely to rule on state finance group merger
By Ted Chen, The China PostAmid recent policy developments, the proposed merger of the three state-invested financial companies offering securities investment & trust and consulting services is likely to begin, with the outcome ultimately to be determined by regulators, according to industry observers.
March 15, 2013, 12:54 am TWN
The specific terms of the proposed merger of three state-invested financial institutions—including the First Securities Investment Trust (第一投信), Mega International Investment Trust (兆豐國際投信), and Hua Nan Investment Trust (華南永昌投信) — such as which entity will lead the new consolidated company, will be determined by a Ministry of Finance ruling, according to reports.
Foreign institutional investors yesterday responded that the pending deal will represent a prime example of resource consolidation and an ideal method of increasing operational efficiency. However, the merger will require the consent of the company's respective parent holding companies, which may complicate the merger process, said the foreign institutional investors. In addition, the impacts of the proposed merger cannot be determined at this time, as the formation of a large new state-invested consolidated company may either heighten the competition faced by private enterprises or lead to the expansion of the market in Taiwan, said the foreign institutional investors.
As of the end of 2012, the market for mutual funds in China exceeded NT$13 trillion, representing three times the market value of mutual funds operating in Taiwan at NT$4.4 trillion, said foreign institutional investors as they illustrated the critical need for Taiwan's state-invested financial companies to merge.
Currently, the three state-invested companies command about 10.84 percent or NT$212.516 billion of Taiwan's investment funds market; upon completion of the proposed merger, the new company will take the runner-up position out of Taiwan's 38 financial institutions in scale, trailing behind Yuanta Financials' (元大寶來投信) NT$308.9 billion, according to estimates by the Securities Investment Trust & Consulting Association (SITCA, 投信投顧公會).
Finance Minister Chang Sheng-ford should take a more active role in facilitating the proposed merger, said SITCA, adding that the process should take place as soon as possible, for the best interest of the investing public.