| Summary: | 碩士 === 國立臺灣大學 === 財務金融學研究所 === 96 === This is a critical point for the future of the financial industry in Taiwan due to the relaxation of cross-Strait policies, the rise of new developing countries, and the loosened regulations. The writer hopes this essay can help transfer management knowledge and technology, as well as the experiences of a large securities company to medium size securities, which can reduce management costs of merger and acquisition, and raise the level of management knowledge among securities companies.
This study incorporated data collection in the form of historical data mining, analysis of the industry and its competition, as well as the opinions of Mr. Robert F. Bruner from his book “Applied M&A” regarding the theory of “Integration”. In order to make more punctual predictions regarding the consequences of the merger of Yuanta and Fuhwa Financial Holding Corp. in the future, a study was conducted to evaluate the compliance of practice with the theory. This study also referred to the case of merger of Citibank with Salomon Smith Barney in 1998, and introduces of case of Jihsun Securities merging with Baodao Commercial Bank in 2001. We are trying to identify some key successful factors for integration. We hope there will be some value for references.
It seems the only way of seeking economic growth is to share global resources and step onto the international stage, with its larger-scale market, and the healthy international capital market. By a series of M&A, Yuanta Securities has become the larger than any of its competitors in the industry. Nevertheless, it has not fully demonstrated its leverage of capital capability due to regulatory restrictions, comparing with the financial industries of banking and insurance. As such, its competitiveness appears inferior to that of other financial institutions. Due to under utilization of capital capability among the securities industry, major players in the industry have sought other methods of growth. For example, Polaris Securities Co., Ltd. tried to invest in Overseas Chinese Commercial Bank； and KGI Securities Co., Ltd. tried to invest in China Development Financial Holding Corp., and join with President Securities Co., to become a 3-in-1 consolidation; Jihsun Securities Co., Ltd. has merged with Baodao Commercial Bank; and Yuanta Securities Co., Ltd. has invested in and manages Fuhwa Securities Co.. All these facts show the ambitious of securities companies to seek opportunities for growth.
Theoretically, the business model of a financial holding company makes it much easier to reduce operating and financing cost, as well as affecting of efficiency due to economic scope by joint utilization of resources of memberships within the group. In practice, mergers and acquisition among homogeneous subsidiaries are more likely to succeed. Successful cases include acquisition of Taishin Commercial Bank and Ta An Commercial Bank; Fubon Commercial Bank’s acquisition of Taipei Bank; China Trust Commercial Bank’s acquisition of General Commercial Bank, etc.. In the case represented here, Yuanta Securities Co., Ltd. has ample experiences in merger and acquisition. However, in enlarging its economic scale, those experiences were limited to homogeneous securities companies. This is the first time it has merged with a heterogeneous bank. Furthermore, there is no precedent of a successful merger between a securities company and a bank. This was evidenced by the following cases: Polaris Securities Co. was trying to merge with Overseas Commercial Bank, but was finally re-sold it to Citibank, instead; and Jihsun Securities Co. merged Baodao Commercial Bank, but the synergy of the merger was not as good as it projected. In addition to lacking successful precedent in the past, the characteristics of securities and banking industries, such as culture, values, regulations, etc. are different from each other. To prevent any undisciplined competitions caused by keen competition among the financial industry, consequently, a recommendation by following the theory of “Integration” stated in Mr. Robert F. Bruner from his book《Applied M&A》.
Some key successful factors for integration include: systematic risk management, branding, competitiveness, executions, visionaries, marketing capability, and recruit talent staff, are required for development toward investment banking under this study. Other than those, to enlarge economic scale by increasing distribution channel, to reduce risks by diversifying products and customers, to expand sales market to overseas, to recruit talent staff, to establish the infrastructure of internet for communications, were mentioned by some other studies in Taiwan.
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