05.02.2001
Taipei Bank agrees to give 'technical assistance' to Chung Shing Bank

• Taipei Bank (2830 'Bei Yin') yesterday confirmed it will provide 'technical assistance' to Chung Shing Bank (2846 'Zhong Xing Yin'). Chung Shing Bank has been labouring under a serious bad debt problem and its situation has been monitored by the Ministry of Finance (MoF) for more than one year. The MoF has been pushing for Taipei Bank to take over Chung Shing.

• Providing technical assistance is not considered a merger and is the first such case in Taiwan. In return for payment, Taipei Bank will assist Chung Shing in designing financial products, handling non-performing loans and with corporate restructuring. Taipei Bank's chairman insists that no financial responsibility will be borne by the bank, meaning its sound financials will not be adversely affected.

• Taipei Bank recently won the right to run Taiwan's national lottery. The MoF denies there is any connection between Taipei Bank's winning bid and its agreement to help Chung Shing Bank, though this remains a concern.

• We believe the technical assistance deal is better for Taipei Bank than a full merger with Chung Shing, especially since there is no financial involvement. The MoF has indicated that another bank merger will be forthcoming this month, and we believe there is a strong possibility that Taipei Bank will be in the picture.

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