An application for merger filed by the Bank of Taiwan to acquire and quarantee all operations and assets and liabilities of the Dongang Credit Cooperative in Pingtung County

Chinese Taipei


Case:

An application for merger filed by the Bank of Taiwan to acquire and quarantee all operations and assets and liabilities of the Dongang Credit Cooperative in Pingtung County

Reference:

Fair Trade Commission Decision of September 15, 1999 (the 410th Commissioners' Meeting); Letter (88) Yi Tzu No. 881172-001

Industry:

Domestic Banking Industry (6512)

Relevant Law:

Article 6, 11 and 12 of the Fair Trade Law

Summary:

  1. Case description:

    The Bank of Taiwan applied to acquire and guarantee all operations, assets and liabilities of the Dongang Credit Cooperative in Pingtung County. Since the sales of one of the participating enterprises in fiscal 1998 exceeded NT$5 billion, an application for merger was filed in accordance with Article 11 of the Law.

  2. Analysis and comments:

    (1) The Bank of Taiwan's savings and loan balances accounted for 10.39% and 9.4% of the savings and loan balances of all Chinese Taipei's financial institutions as a whole. The savings and loan operations of Dongang Credit Cooperative, on the other hand, were negligible. Due to a recent rapid loss of savings account customers, its savings operations had become almost non-existent. Statistics showed that there were 5,432 domestic financial institutions across the island as of the end of August 1999. The Bank of Taiwan currently has 102 business outlets, while Dongang Credit Cooperative has six outlets in Pingtung county. After the merger, the Bank of Taiwan's outlets would be increased to 108, accounting for 1.99% of the total number of financial institutions. Prior to the merger, Pingtung had 178 financial institutions, including two Bank of Taiwan outlets. Together with the existing six Dongang Credit Cooperative outlets, the merger would result in eight Bank of Taiwan outlets in Pingtung, accounting for only 4.49% of the total number in that county. Taking into consideration the above factors, it can be seen that the merger would have minimal impact on competition in the financial market.

    (2) Adverse effects of the merger in terms of restraints on competition were foreseen to be minimal. The Bank of Taiwan's acquisition of the Donggang Credit Cooperative's operations was in line with the Ministry of Finance policy to rescue poorly managed grassroots financial institutions. The merger would help to safeguard the interests of the cooperative's depositors, and would have a positive effect on maintaining order within the financial market.

    (3) From the above analysis, it is evident that the merger would not result in significant changes to the market structure. It would not result in immediate restraints on competition, and the resulting overall economic benefit would be greater than the disadvantages in terms of restraining competition. The merger was therefore approved in accordance with the provisions of Article 12 of the Law. If the merger were to otherwise involve financial administration regulations or other relevant laws and regulations, such matters should of course be handled in accordance with law.

Summarized by Cheng P'eng-chi
Supervised by Hu Kuang-yu

Appendix:
Bank of Taiwan's Uniform Invoice Number: 91321902
Dongang Credit Cooperative's Uniform Invoice Number: 0355731


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