Bank of Taiwan, Land Bank of Taiwan and The Export-Import Bank of ROC

Case:

Key Words:

Exchange of stock share, market share, restriction of market competition, substitutability

Reference:

Fair Trade Commission Decision of October 4, 2007 (the 830th Commissioners' Meeting)

Industry:

Banks (6412)

Relevant Laws:

Article 6 , 11 and 12 of the Fair Trade Law , Article 11 of Regulations for the Examination of Financial Holding Company Merger Cases

Summary:

1. Bank of Taiwan, Land Bank of Taiwan (hereinafter referred to as "Land Bank") and The Export-Import Bank of ROC (hereinafter referred to as "Export-Import Bank") planed to establish Taiwan Financial Holdings Co. Ltd. (hereinafter referred to as "Taiwan Financial Holdings") via exchange of stock shares.　The Ministry of Finance has transferred all shares of Bank of Taiwan, Land Bank and The Export-Import Bank to establish the new Taiwan Financial Holdings.　As a result, Taiwan Financial Holdings would then acquire 100% share of Bank of Taiwan, Land Bank and the Export-Import Bank. This will conform with the merger type defined in Article 6(1)(ii) of the Fair Trade Law, that is, "where an enterprise holds or acquires the shares or capital contributions of another enterprise to an extent of more than one-third of the total voting shares or total capital of such other enterprise".　The sales revenue of the merger amongst the Bank of Taiwan, Land Bank and the Export-Import Bank for the last year reaches the threshold for merger declaration as specified in Article 11(1)(iii) of Fair Trade Law, and did not fall into any exceptions specified in Article 11-1 of Fair Trade Law.　Since Taiwan Financial Holdings is not yet established, Bank of Taiwan, Land Bank and the Export-Import Bank shall file the merger report to the FTC according to Article 5(2) of the Regulations for the Examination of Financial Holding Company Merger Cases.
2. The effect of this merger would impact on the markets for deposit, loan, trust and guarantee, according to the announcement made by the Financial Supervisory Commission, Executive Yuan (hereinafter referred to as "Financial Supervisory Commission").　There are 14 financial holdings in this country, as well as 73 foreign and local banks, and thus the market for financial services providers is rather competitive.　Although after the merger, it will possess more than 15% of the deposit and loan market, there is no obvious danger of restriction on market competition.　In addition, the potential for the market centralization in the markets for deposit, loan, trust and guarantee is quite limited as the market remains to be medium low centralization status and there is not restrictive impact on market competition.　After the merger, the substitutability for the financial products and services provided by other competitors are still high, and would not impact on the current entry barrier of the financial service industry.　In addition, the merger would enhance the convenience of the financial service and to promote consolidation of our domestic financial institutions via consolidation of public bank and would benefit the overall economy.
3. The resolution of the 830th Commissioners’ Meeting on October 4, 2007 decided the benefits brought by the merger outweigh the negative impact of restriction on market competition caused by the merger and it is in accordance with Article 12(1) of Fair Trade Law and Article 11 of Regulations for the Examination of Financial Holding Company Merger Cases.　This merger therefore shall not be prohibited, and the Commission, according to the conditions of Article 11(3) of Fair Trade Law, issues a notice with the purpose of shortening the waiting period, so that the participating enterprises may proceed with the merger upon receipt of the official notice.

Appendix:
Bank of Taiwan's Uniform Invoice Number: 03557311
Land Bank of Taiwan’s Uniform Invoice Number: 03700301
The Export-Import Bank of ROC’s Uniform Invoice Number: 12211183

Summarized by Lai, Mei-Hua; Supervised by Chen,Yuhn-Shan