| dc.description.abstract | To enhance the competitiveness of the financial industry and improve its management efficiency, Taiwan′s government actively promoted financial reforms and consolidation policies, and passed the Financial Institutions Merger Act at the end of 2000. Additionally, the government promulgated the Financial Holding Company Act on June 27 2001, which officially took effect on November 11 of the same year. Financial Assets Securitization Act and the Organization Act of Financial Supervisory Commission were successively adopted to promote the establishment of financial holding companies. To provide clients with the “one-stop shopping” service, financial institutions in Taiwan have begun to conduct mergers and acquisitions (M&A), and through resource sharing among subsidiary companies affiliated to financial holding companies, these companies expand and diversify their business to obtain higher rewards.
The Bank of International Settlements ratio (BIS ratio) and non-performing loans ratio (NPL ratio) of Taiwan′s banks show that the assets quality of the financial industry has greatly improved. However, as the number of banks is high, and the market concentration rate is quite low, price competitions can still be seen under a highly competitive situation. This shows that Taiwan still has to promote M&A in the financial industry. In recent years, Taiwan′s government has chanted the slogan of “Asian Cup for the financial industry” to make the industry in Taiwan rapidly expand its scale through M&A or joint-stocks with overseas institutions. It is hoped that three to five financial institutions will become significant regional financial institutions in Asia. In May 2015, the government′s financial M&A policy saw another important reform: public-bank-mergers would be replaced by private-bank-mergers among private financial institutions. In August 2015, Yuanta Financial Holding Co., Ltd. announced its M&A with Ta Chong Bank and planned a merger between its affiliated Yuanta Bank and Ta Chong Bank. The M&A case of commercial banks was nine years apart from the previous one. The study adopted case study and 8-Cross Business Model to probe into the subjects, Yuanta Bank merging with Ta Chong Bank and analyzed benefits and influence on the business performance of Yuanta Bank from the M&A.
The conclusions of the study are as follows:
1. To develop its business overseas for the entire group and expand its overseas territory to disperse the origin of its profits, Yuanta Bank had to accelerate internationalization. The merger with Ta Chong Bank made it obtain the Hong Kong branch smoothly as it is the gate to China′s market. This conformed to the development strategy of the entire financial holding group and the government′s “Asian Cup” policy which encourages financial institutions to establish branches or conduct M&A overseas as well.
2. It is required to search for a goal to create the maximum merger synergy during M&A. The case of Yuanta Bank merging with Ta Chong Bank should be able to achieve the goal. Main reasons are as follows:
(1) The scale of Yuanta Bank and Ta Chong Bank was equivalent, and the management of the two banks after the M&A is still controllable, so there is less impact on the arrangement of management strata and human resources.
(2) The assets quality and BIS ratio of merged Ta Chong Bank were good, and the constitution of the bank was quite good, so Yuanta Financial Holding Co., Ltd. can have positive development after the M&A.
(3) The two banks can complement each other on their business structures and locations.
(4) The management features of the two banks were considerably different. After the M&A, they can reevaluate to adopt the organizational structure and system of the bank with better performance to create better profitability and management efficiency.
3. After merging with Ta Chong Bank, the entire assets of Yuanta Bank can reach over NT1.2 trillion dollars, its market share will increase approximately 3%, and it will rank seventh among private banks in Taiwan. Therefore, the M&A can enhance the competitiveness and brand strength of the bank. | en_US |