Filing of merger report by Chinatrust Financial Holding Co., Ltd. in accordance with the provisions of Article 11 of the Fair Trade Law, based on its plan to acquire 100 percent of Grand Commercial Bank shares
Case:
Filing of merger report by Chinatrust Financial Holding Co., Ltd. in accordance with the provisions of Article 11 of the Fair Trade Law, based on its plan to acquire 100 percent of Grand Commercial Bank shares
Key Words:
banking, financial holding company
Reference:
Fair Trade Commission Decision of August 21, 2003 (the 615th Commissioners' Meeting)
Industry:
Other Financing and Auxiliary Financing Not Elsewhere Classified (6299)
Relevant Law:
Summary:
1. Chinatrust Financial Holding Co., Ltd. (Chinatrust Financial) seeks to acquire 100 percent of Grand Commercial Bank' s (Grand Commercial) issued shares. Furthermore, due to the fact that Chinatrust Financials' total sales in the preceding fiscal year exceeded NT$20 billion and that the same figure for Grand Commercial exceeded NT$1 billion, a merger report was filed with the Fair Trade Commission (FTC) in accordance with the provisions of Article 11 of the Fair Trade Law.
2. Since Chinatrust Commercial Bank Ltd. (Chinatrust Bank) and Chinatrust Securities Co., Ltd. (Chinatrust Securities) are already subsidiaries under the Chinatrust Financial banner, the main purpose for acquiring Grand Commercial is to expand the scope of their banking business. However, there are many small-scale competitors in the banking industry and market competition is fierce. Up until the end of May 2003, the deposit operations of Chinatrust Financial' s subsidiary, Chinatrust Bank, comprised 3.73 percent of the market share, while its lending operations comprised 3.94 percent of the market share. In contrast, Grand Commercial' s deposit and lending operations respectively accounted for an 0.87 percent and an 0.95 share of the market. In view of Grand Commercials' limited market position with regard to both its deposit and lending operations, after merging with Chinatrust Financial, the increase in both its business operations and market share will be minimal even though the Chinatrust Group' s Chinatrust Bank is also engaged in banking. Thus, following this acquisition, there should be no misgivings regarding undue restriction of competition in either the borrowing or lending markets, nor will it create a negative impact on market competitiveness and convenience of service.
3. Following this acquisition, Chinatrust Financial will add Grand Commercial to the original Chinatrust Bank and Chinatrust Securities under its Chinatrust Group. This will not only expand its scale of operations and increase sales channels, but also allow for integration of the consortium' s resources, adjust organizational size and common operational support systems, and enhance financial management and the efficiency of capital allocation, thereby lessening the consortium' s overall risk exposure. Consumers can satisfy their desire for "one-stop shopping" and enjoy varied and low cost services through this financial holding company' s combined services.
4. To summarize, after assessing the acquisition of Grand Commercial by Chinatrust Financial, the FTC finds that the main purpose of the merger is to expand the scale of its banking operations, and as such, there will be no obvious restrictions on competition with respect to relevant market structures and competitive conditions. In addition, considering that following the merger, the enterprises involved will have the opportunity to benefit from the synergy of their cross-sector operations, the benefit to the overall economy in this case will be greater than any potential detriment to competition. Consequently and in accordance with the provisions of Article 12(1) of the Fair Trade Law, the FTC will approve this merger.
Appendix:
Chinatrust Financial Holding Co., Ltd.' s Uniform Invoice Number: 80333992
Grand Commercial Bank' s Uniform Invoice Number: 86379811
Summarized by Hung, Hsuan; Supervised by Horng, Der-Chang