New Holding Companies Bring Financial Consolidation.

The Ministry of Finance (MOF) approved the establishment of seven new financial holding companies on the last day of 2001. These seven will join six other such firms that have been set up recently, inaugurating an extensive consolidation of Taiwan's financial industry

The most notable of the seven new companies is CTB Financial Holdings Co., to be established by the government-run Chiao Tung Bank and Chung Hsing Bills Finance Co., the island's leading bills-finance firm. It will also incorporate a securities brokerage. The prospective company will have a paid-in capital in excess of NT$55 billion (US$1.57 billion at NT$35:US$1), with NT$27.1 billion (US$774 million) coming from Chiao Tung Bank and NT$28.1 billion (US$802 million) from Chung Hsing Bank. A strong synergy is expected from this corporate marriage, since Chiao Tung Bank's long-term investment business will complement the short-term financing provided by Chung Hsing

The other six companies in the group include Shinkong (organized by Shinkong Life Insurance, Taiwan's second-largest life-insurance firm), Taishin (set up by Taishin International Bank), First (First Commercial Bank), Jih Sun (Jih Sun Securities), E. Sun (E. Sun Bank), and Fuh-Hwa (Fuh-Hwa Securities Finance). Of the six in the first group approved, in November, Hua Nan Financial Holding Company boasts the greatest assets, at NT$1.23 trillion (US$35 billion), and paid-in capital of NT$41 billion (US$1.17 billion). Set up by Hua Nan Commercial Bank, it will include Entrust Securities and an asset-management company (AMC) to be established jointly by Hua Nan and Lehman Brothers. The AMC will have a paid-in capital of NT$20 billion (US$570 million), half of which will come from Hua Nan in the form of bad debt

The second-largest of the initial six in terms of assets, at NT$1.09 trillion (US$31 billion), is Cathay Financial Group, which has paid-in capital of NT$58.4 billion (US$1.66 billion). In addition to Cathay Life Insurance, the island's largest life insurer and flagship of the Linyuan Group, this holding firm also includes Capital Securites, a leading securities brokerage. Two financial firms in the Linyuan Group, one in the field of banking and the other in property insurance, will later come under the umbrella of the holding company

Foreign Involvement The third of the six is Fubon Financial Holding Company, which has assets of NT$450 billion (US$12.8 billion), a net worth of NT$107 billion (US$3 billion), and paid-in capital of NT$54.6 billion (US$1.56 billion). In includes Fubon Insurance, Taiwan's largest property insurer and flagship of the Fubon Group, as well as …