Business » Companies
Author`s name Alex Naumov

Citigroup to acquire Taiwanese bank

Citigroup Inc. announced Monday it will purchase a mid-sized Taiwanese bank for 14.1 billion New Taiwan dollars (US$425 million, euro320 million), in the latest of the U.S. financial group's overseas expansion plans.

In an all-cash deal, Citigroup will pay NT$11.8 (36 US cents) a share to acquire the Bank of Overseas Chinese. The deal, which was under negotiation for nearly a year, is expected to be completed in the second half of 2007.

The final price is "subject to certain pre-closing adjustments," according to a joint statement issued by Citigroup and the Bank of Overseas Chinese.

After the acquisition, the two banks will have total assets of US$22.8 billion (euro17 billion) and 66 branches on Taiwan. The Taiwanese bank's 55 branches on the island will change their names to Citibank. Citigroup has 11 branches in Taiwan, the AP reports.

Foreign banks also like Taiwan banks' valuations, which are among the lowest in the greater China region following a consumer credit crisis that put many players into losses, analysts said.

Citigroup paid three times 2007 price to book for BOOC, said Nora Hou, an analyst at Nomura Securities, adding: "Citi is anxious to close the deal as BOOC is probably the only Taiwan lender willing to give up its management control."

Citigroup previously acquired, and later sold, a 15 percent stake in the banking arm of Taiwan's Fubon Financial, reportedly abandoning the investment due to control issues.

Citigroup said it will set up a subsidiary to buy BOOC, with completion set for the second half of this year. The deal is subject to Taiwan and U.S. regulatory approval, Reuters reports.

In 2000, Citigroup paid NT$23 billion for 15 percent of Taiwan's Fubon Group, now known as Fubon Financial Holding Co. It began selling down the holding in 2004, saying it wanted to pursue its own strategy, and now has 11 branches on the island.

Citigroup is trying to expand consumer banking in Taiwan to compete with overseas rivals including Standard Chartered Plc. That London-based bank announced an NT$40.5 billion acquisition of Hsinchu International Bank in September, the first overseas buyout of a Taiwanese bank.

Bank of Overseas Chinese lost NT$510.4 million in the nine months through September, narrowing from a NT$799.5 million loss a year earlier. The purchase price represents about 1.3 times the lender's net asset value as of September 2006. Standard Chartered said it paid 2.3 times Hsinchu's net asset value.

Citigroup is expanding in Taiwan as the banking industry recovers from a bad-debt crisis, helped by an economy that grew 4.6 percent last year. Sour credit-card loans that cost banks $6.6 billion in write-offs in 2005 and eroded economic growth were predicted to peak by the third quarter last year, Bloomberg reports.

Source: agencies

Prepared by Alexander Timoshik
Pravda.ru

Discuss this article on Pravda.ru English Forum

Several years ago, a prominent Indonesian businessman who now resides in Canada, insisted on meeting me in a back room of one of Jakarta's posh restaurants. An avid reader of mine, he 'had something urgent to tell me', after finding out that our paths were going to be crossing in this destroyed and hopelessly polluted Indonesian capital.

Capitalism reduced Indonesian cities to infested carcases

Several years ago, a prominent Indonesian businessman who now resides in Canada, insisted on meeting me in a back room of one of Jakarta's posh restaurants. An avid reader of mine, he 'had something urgent to tell me', after finding out that our paths were going to be crossing in this destroyed and hopelessly polluted Indonesian capital.

Capitalism reduced Indonesian cities to infested carcases
Comments
ISIS threatens to conduct large-scale terrorist attacks in USA for Jerusalem decision
American Bioweaponry
Capitalism reduced Indonesian cities to infested carcases
Putin to Sobchak: We will never let them turn Russia into another Ukraine
Putin to Sobchak: We will never let them turn Russia into another Ukraine
Putin to Sobchak: We will never let them turn Russia into another Ukraine
Putin to Sobchak: We will never let them turn Russia into another Ukraine
Russia on the eve of another Crimea referendum
Putin to Sobchak: We will never let them turn Russia into another Ukraine
Europeans say what puzzles them in Russia most
Russian man grows abnormally large biceps that he calls bazookas
Science and Technology. Consensus builders for the media instrument
North Korea says Trump makes first step towards nuclear war
Capitalism reduced Indonesian cities to infested carcases
North Korea is not a threat to the US
USA to ruin Russian-Japanese relationship with the help of Aegis Ashore system
USA to ruin Russian-Japanese relationship with the help of Aegis Ashore system
USA to ruin Russian-Japanese relationship with the help of Aegis Ashore system
Russia to rebuild its former Soviet naval base in Syria's Tartus
Russia to rebuild its former Soviet naval base in Syria's Tartus
North Korea is not a threat to the US