The purchase was inked April 9 and would be completed via a "cash-out merger," according to which, Citigroup would remit money to BOOC shareholders' bank accounts after the deal went into effect, the Chinese-language Liberty Times reported April 10, adding that the price per share would be around US$0.35.
After the merger, BOOC would be delisted from Taiwan Stock Exchange Corp. and all of its 55 branches would be renamed Citibank, said the report. This would give Citibank a total of 66 branches in Taiwan, and a total capital value of up to US$22.8 billion, making it the nation's largest foreign bank and 13th largest overall. Citibank would incorporate more than 1 million BOOC clients, including depositors, creditors and those using financial management services, the Liberty Times report continued.
Wayne Pai, chairman of Polaris Financial Group--the largest of BOOC's shareholders--was quoted by Liberty Times as saying the deal was made in view of BOOC's restricted internationalization, lack of financial products and limited size. Cooperation with Citibank, he said, was expected to benefit BOOC's clients, employees and shareholders.
Robert Morse, managing director and CEO of Asia Pacific Corporate and Investment Banking under Citigroup, said in the same report that the purchase was a significant step by Citibank to reinforce its development in Taiwan. It reflected Citibank's resolution and capability to expand, as well as its strategic plans for merger and acquisition.
The domestic banking sector viewed the Citigroup-BOOC deal as a reflection of the global trend toward financial integration. Taishin Financial Holding Co. Ltd. Chief Operation Officer Greg Gibb said that this became increasingly apparent after equity firms entered the Asian market, the Chinese-language China Times reported April 10. Fubon Financial Holding Co. President Victor Kung said in the same report that foreign investors acquired domestic banks with the aim of improving their interactions between Taiwan, Hong Kong and China. This was especially attractive to clients of Taiwanese banks working in China, therefore. At present, domestic banks are still unable to set up branches in China due to a lack of memorandum of understanding between official financial supervisory bodies of the two nations.
The Financial Supervisory Commission under the Executive Yuan said that such mergers and acquisitions were a matter for the two parties concerned, and that FSC encouraged internationalization of Taiwan's financial sector, the China Times reported April 10.
The acquisition was expected to be approved at the BOOC's board of directors meeting scheduled for June 15, and the merger to go into effect in September, the Chinese-language Commercial Times reported April 10.
This is the second major purchase by a foreign bank, the first being that of Hsinchu International Bank by London-based Standard Chartered Bank in November 2006. After HIB formally adopts the name of Standard Chartered in the second half of 2007, Standard Chartered would have 86 branches in Taiwan, a massive rise from the three at present, Taiwan's Central News Agency reported March 27.
Write to Annie Huang at shihyin@mail.gio.gov.tw