05.29.2001
First Commercial and Dah An wrangling over merger details

• It is unlikely the three way merger of First Commercial Bank (2802 'Yi Yin'), Dah An Commercial (2829 'Dah An') and Pan Asia Bank (5810 'Fan Ya Yin') will be finalized by the deadline. All three bank chairmen reportedly differ as to the best way forward.

• First Commercial, which is leading the merger drive, has indicated that if Dah An does not pass its asset and financial details on to a specified accountant before the end of June, it will have to withdraw. Dah An has said it would rather wait until the share swap ratio is calculated before disclosing such information.

• On a visit to First Commerical, we learned that the company is not so optimistic about merging with Dah An. Dah An's refusal to disclose asset quality is hindering calculations on the intrinsic share swap ratio between the two banks. However, First Commercial will continue to view Pan Asia Bank as a merger option regardless of Dah An's final decision.

• VB Primasia Investment Opinion: Market rumour has it that Dah An is talking with several foreign banks on M&A. However, its reluctance to disclose financial information leads us to believe there is a possibility the three way bank merger will not be brought to completion. We expect First Commercial will continue to look for other candidates of better quality. We maintain our WEAK HOLD view on this counter.

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