03.26.2001
China Bills and Chiao Tung Bank to form financial holding company

• The Ministry of Finance (MoF) is planning to transfer, through Executive Yuan Development Funds, its 15.9% ownership of China Bills Finance Corp. (2820 'Hua Piao') to Chiao Tung Bank (2824 'Jiao Yin'), making its shareholdings in Chiao Tung 21.4%.

• Once Chiao Tung increases its holdings in China Bills to 25%, the latter can be absorbed into the financial holding company planned by Chiao Tung. The two business entities would prefer to attain this structure through share swap.

• Chiao Tung also plans to boost holdings in Taiwan International Securities Corp. (6012 'Jin Ding Zheng') and Pacific Insurance (unlisted) in preparation for the formation of the holding company. Unconfirmed reports suggest that International Commercial Bank of China (2806 'Zhong Yin') is also being targeted.

• We hold positive on Chiao Tung Bank as the establishment of the financial holding company will operate complementary businesses including bills finance, insurance and securities. China Bills Finance will be able to provide short-term funds to support the daily operations of Chiao Tung Bank.

WilliamFong@Primasia.com +886-[0]2-2547-8864