The acquisition will make Yuanta the seventh largest private bank in Taiwan. It will also give Yuanta over 60 branches in Taiwan to the bank’s already existing 88 banking outlets.
Yuanta plans to pay for the purchase through cash and stock.
Yuanta spokesperson Vincent Chen was quoted by Bloomberg as saying: "Yuanta, now a securities-focused financial firm, will expand its presence in banking via the acquisition. The bank is aiming for the deal to close after the Lunar New Year next year."
With the sale, Washington-based Carlyle that owned the Ta Chong Bank will be able to exit its investment in a bank that reported a decline in net income in two of the past three calendar years.
The acquisition will help Yuanta increase its asset holding to NT$1.25tn, out of which around NT$1tn will be in savings, NT$75m in loans and 500,000 in credit cards, reported the China Post.
The acquisition is expected to compliment the businesses of the two banks as Yuanta provides loans primarily to institutions, while Ta Chong deals mainly with private individuals.
Hua Nan Securities analyst Henry Miao was quoted by Focus Taiwan as saying: "Taiwan’s banking sector is saturated. Under such circumstances, it’s not easy for smaller banks like Ta Chong to compete.
"For Yuanta Financial, its subsidiary Yuanta Bank needs to expand to become more competivive in the local market. That’s why investors scrambled to pick up Yuanta Financial shares on hopes that Yuanta Bank will benefit from the acquisition."
