A Study on Public Banks Merger Strategies under Current Financial Environment in Taiwan-Merger between Central Trust of China and Bank of Taiwan as Example

• Main Authors: Ghin-Ho Tsao, 曹金合
• Other Authors: Wen-Rung Ho
• Format: Others
• Language: zh-TW
• Published: 2008
• Online Access: http://ndltd.ncl.edu.tw/handle/65446565318182187781

碩士 === 開南大學 === 財務金融學系 === 97 === In 1992 Taiwan saw over-banking phenomena resulted from booming of new banks founded immediately following removal of the ban by the authority. Consequently the banking units in Taiwan demonstrated typically dispersed in scale and high in homogeneity, compared to those in mainstream countries, and obviously ran short of competing niches when facing the competing impact from large scale international banking institutions featured high performance. further, banking units in Taiwan’s financing sector either individually or jointly as a whole, became more and more aware of being trenched with the pitfalls of weak nature and unstable ground and in turn demonstrated ever worsening performance under the affective factors such as inadequate government performance and very changeable external environment. Moreover, ever since “The Second Financial Reform” initiated by the Past President, Chen, the consequences would be: (1) By 2005 year end, the market share of 3 banking units promoted to 10%; (2) By 2005 year end, the number of public share banking unit decreased from 12 formerly to 6 later; (3) By 2006 year end, the number of domestic financial holding units, say 14, decreased to a half, say 7; and (4) By 2006 year end, at least one banking unit (to be) operated by foreign investors or initiating public offering overseas. Financial merger is an inevitable trend in the coming future. As a matter of fact, in overseas market, merger can be traced back for years and in most cases has been quite sophisticated and more importantly with overall strategic consideration and contemplation. In contrast, most of the domestic merger cases were motivated by pursuit of solutions to problematic banks (such as the General Assumption of local banking units) and by pursuit of “large in scale”. As a result, more often than not the merger cases ended up with controversy and argument and this is one of the major factors motivating the current study. It was on December 29, 1999, the merger of Bank of Taiwan, Central Trust of China and Land Bank of Taiwan was announced by Ministry of Finance to the public thanks to the ripple effect of the tide of merger between leading global banks and the escalation to the “Merger Policy” of MOF. At the beginning the merger first seemed to be so nature and acceptable on the basis of their common ground – 100% public shares and the merger between domestic banking units being taken as a pilot combination by the financial sector. However, the merger was suspended due to the suspected synergy of merger shortly. In 2001, a “Three-in-One” Merger Project was announced by MOF and, like the earlier case, it came to an official suspension due to the suspected merger synergy before Executive Yuan gave the approval. It was not until July 1, 2007, the merger of the said three banking unit could come into reality with the approval from Executive Yuan to MOF and before that an assessment and evaluation report made by a professional finance consulting corporation contracted by the governmental authority under the setting of initiating the implementation of decreasing number of existing public banking units down to a half in 2005. The current study conducted a series of analysis and exploration on the case of merger between Central Trust of China and Bank of Taiwan as example with an attempt to present the results as reference for the acquiring firms and target firms in merger cases.