05.11.2001
Rumours of a UWCCB - Taishin merger unsubstantiated

• It is reported that United World Chinese Commercial Bank (UWCCB, 2826 'Shi Hua Yin') and Taishin International Bank (2844 'Tai Xin Yin') may merge to form a new bank called 'Shi Tai Bank'. Taishin will reportedly acquire the 30% of government-related holdings in UWCCB using the financial group's capital.

• In sum, we doubt the veracity of this news. As Fubon Group and Cathay Life Insurance (2805 'Guo Shou') have both recently increased their holdings in UWCCB, the market sees it as a more likely merger target of these two competing buyers than Taishin. Moreover, since Taishin is a part of the Shin Kong Group, it is not expected to merge with other banks in the near future.

• VB Primasia Investment Opinion: Our recent visits to UWCCB and Taishin here led us to conclude that these banks would prefer to transform into financial holding companies rather than merge with other banks. Moreover, UWCCB has a larger book value per share (NT$19.2) than Taishin (NT$13.0), making any prospective acquisition expensive for Taishin (a share swap would be more suitable). We recommend BUY UWCCB and ACCUMULATE Taishin.

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