VZCZCXRO4553
RR RUEHGH
DE RUEHIN #0336 0430858
ZNR UUUUU ZZH
R 120858Z FEB 07
FM AIT TAIPEI
TO RUEHC/SECSTATE WASHDC 4082
RUEATRS/DEPT OF TREASURY WASHDC
INFO RUCPDOC/USDOC WASHDC
RUEHBK/AMEMBASSY BANGKOK 3590
RUEHBJ/AMEMBASSY BEIJING 6365
RUEHUL/AMEMBASSY SEOUL 8464
RUEHGP/AMEMBASSY SINGAPORE 6813
RUEHKO/AMEMBASSY TOKYO 8488
RUEHML/AMEMBASSY MANILA 9953
RUEHJA/AMEMBASSY JAKARTA 4006
RUEHKL/AMEMBASSY KUALA LUMPUR 3686
RUEHHI/AMEMBASSY HANOI 3233
RUEHBY/AMEMBASSY CANBERRA 4454
RUEHWL/AMEMBASSY WELLINGTON 1720
RUEHHK/AMCONSUL HONG KONG 7600
RUEHGH/AMCONSUL SHANGHAI 0820
RUEHGZ/AMCONSUL GUANGZHOU 9997

UNCLAS TAIPEI 000336 
 
SIPDIS 
 
SIPDIS 
 
STATE PLEASE PASS USTR 
STATE FOR EAP/RSP/TC, EAP/EP 
USTR FOR ALTBACH AND STRATFORD 
USDOC FOR 3132/USFCS/OIO/EAP/WZARIT 
TREASURY FOR OASIA/LMOGHTADER 
TREASURY ALSO PASS TO FEDERAL RESERVE/BOARD OF 
GOVERNORS, SAN FRANCISCO FRB/TERESA CURRAN, AND NEW YORK FRB/MARA 
BOLIS 
 
E.O. 12958: N/A 
TAGS: EINV EFIN ECON PINR TW
SUBJECT:  Taiwan Merges Two State-owned Banks 
 
 
SUMMARY 
------- 
 
¶1.  Two state-owned enterprises, including the largest bank in 
Taiwan, will merge in July 2007.  The new entity will be Taiwan's 
largest financial holding company and its banking unit will have 
over 10% market share.  END SUMMARY. 
 
Two State-owned Enterprises 
--------------------------- 
 
¶2.  Taiwan's Ministry of Finance (MOF) recently announced that 
Central Trust of China (CTC) will merge into Bank of Taiwan (BOT) in 
July 2007.  Taiwan's Fair Trade Commission approved the merger plan 
in May 2006 and banking authorities granted permission in December 
¶2006.  In early January 2007, the Securities and Futures Bureau 
authorized BOT to issue new shares to replace CTC shares at a ratio 
of one BOT share for two CTC shares. 
 
¶3.  Currently, BOT is the largest bank in Taiwan.  It has market 
share of 9% in assets, 9% in deposits, and 8.5% in outstanding 
loans.  CTC ranks 36th in net worth and 26th in assets among 
Taiwan's 42 banks.  However, CTC is a giant in insurance.  CTC is 
the primary insurance provider for all Taiwan military personnel, 
public school faculties, and civil service employees.  It also 
conducts procurement for public agencies. 
 
Changes after Merger 
-------------------- 
 
¶4.  After the merger, the new banking unit will remain the largest 
bank in Taiwan, with market share of over 10%, total assets of 
NT$2.93 trillion (US$88.8 billion), deposits of NT$2.29 trillion 
(US$69.4 billion), and outstanding loans of NT$1.67 trillion 
(US$50.6 billion). 
 
¶5.  According to the MOF, BOT will transform itself into a financial 
holding company (FHC) after the merger.  CTC's non-banking 
departments will be reorganized as independent companies affiliated 
with the new FHC.  With the largest bank, the only insurance 
provider to public employees, and the major public procurement 
contractor, the new FHC will surpass Cathay as the largest one in 
Taiwan. 
 
YOUNG