Taiwan: merger of equals kicks off consolidation
Taiwan's bank consolidation, eagerly promoted by the government, seems to be starting in earnest. In June, SinoPac Financial Holdings and International Bank of Taipei announced a deal to form Taiwan's fourth-largest privately owned bank.
Promoted as a merger of equals, the deal entails the acquisition by SinoPac of IBT in a share-for share exchange. The merged bank will have more than 2.5 million customers, some 130 domestic branches and assets of NT$1,002 billion ($31.3 billion). SinoPac, as the enlarged bank will be called, will rank behind market leaders Chinatrust Commercial, Fubon Taipei and Cathay United but has 32 foreign branches.
The deal, which is subject to shareholder approval, got the market's nod. Standard & Poor's raised its credit rating on SinoPac by one notch to BBB/A-2. Expect more such deals as the government keeps pushing for consolidation.
Indonesia: recapitalize or merge
In an effort to kick-start much-needed consolidation of the crowded banking market, Indonesia's central bank, Bank Indonesia, announced at the end of June new capital adequacy ratio requirements. Banks that fail to meet these targets, will be "offered the option of actively participating in merger and acquisition", says BI euphemistically.