(3 October 2006 – Taiwan) Standard Chartered is set to buy Taiwan’s Hsinchu International Bank for US$1.2 billion after agreeing terms with the Taiwanese bank.It is the first time a foreign bank has bought outright a bank in Taiwan, which has the fourth largest banking market in Asia.
Standard Chartered chief executive Mervyn Davies said that credit conditions in Taiwan were improving and that the purchase of Hsinchu was “the right deal at the right time”.
“It’s strategically compelling, financially attractive and we will convert its huge potential into value for shareholders,” he told analysts.
He said Standard Chartered’s search for a target in Taiwan had intensified in the wake of a run of credit card bad debts which rattled bank owners and caused some investors to relinquish equity.
Last week, data supplied by Taiwan’s Financial Supervisory Commission showed a raft of credit and cash card defaults saw the country’s domestic banks post a T$7,321 million pre-tax loss between them for the month of July.
The banks are expected to return to profitability in the final quarter with the bad debt clean up set to be completed by the end of the current quarter.
Standard Chartered will use the acquisition to capitalise on rapidly expanding trade flows between Asian markets, particularly between Taiwan and China, where exports to the mainland grew by 750 percent between 2001 and 2005.