Does the Jih Sun deal presage much-needed banking consolidation in Taiwan?
Record profits and fines, a big loss in Indonesia, Citi’s retail departure and a once-in-a-generation merger: it has been a strange year for Taiwan’s over-crowded banking sector.
Foreign bank departures, record profits, a big international investment gone badly wrong, an actual merger and fines and penalties galore – the past year has been a topsy-turvy one for Taiwan’s banking sector.
Let’s start with the merger. These are rarer than hen’s teeth in Taiwan. The deal sparked to life in December 2020, when Fubon Financial Holding, owner of Taipei Fubon Bank, the sixth-largest domestic lender by assets, tendered a NT$24.53 billion ($880 million) bid for a 53.84% stake in Jih Sun Financial.
For a few months it was on a knife edge. Fubon Financial targeted a minimum stake of 50.01% in Jih Sun, a far smaller commercial lender with $12 billion in assets. In the last week of March the deal was given the green light, pending approval from the Financial Supervisory Commission (FSC).
For once, the main stumbling block was not interference from the powerful unions that have blocked any number of attempts at domestic consolidation. This time the challenge was convincing enough of Jih Sun’s shareholders to sell up. Japan’s Shinsei Bank was keen to divest its 35.5% stake.
Capital Target was a different matter. It was keen to divest its block of shares, but there was concern about the identity of its owner.