Rumours are rife in Taiwan’s financial market that many investors are inquiring about possibilities of mergers and acquisitions and equity participation in small Taiwan banks. Foreign and mainland companies are making positive steps to arrange their investment portfolio on both sides of the Taiwan Straits in anticipation of the signing of a memorandum of understanding on cross-straits financial supervision.

It is understood that at least two groups of investors are casting a covetous eye on small banks in Taiwan. The first group is made up of foreign investors planning to venture into the mainland. They are taking Taiwan banks as a base for personnel training base. These companies are interested in the human resources of Taiwan banks rather than the banks themselves. The second group comes from the mainland. Mainland buyers are interested in small banks despite possible hidden troubles such as dubious asset quality because mainland buyers are in a better position to call the shots in negotiations with small banks than large ones. Besides, the time and takeover cost is also relatively low.

Mainland banks are showing keen interest in Taiwan banks as the day of the signing of the MOU on cross-straits financial supervision draws near. Compared with incorporation as a new entity, M&A with small banks is the fastest and most cost-effective way for mainland companies to enter Taiwan’s financial market.

Small Taiwan Banks at a Glance