Price, wealth management drive Chinatrust to Japan bank: Experts

TAIPEI, Taiwan - Low price and strength in wealth management were some of the factors that got Taiwan's Chinatrust Commercial Bank interested in buying Japan's Tokyo Star Bank (TSB), local analysts said yesterday.

They made the remarks after Nikkei News reported Sunday that Chinatrust is planning to spend 50 billion yen (S$700 million) or NT$16.8 billion (S$700 million) to acquire TSB. Chinatrust meanwhile has declined to comment, saying it never responds to media reports concerning merger and acquisition deals that it may or may not engage in.

Yesterday, analysts said that Chinatrust might be interested in TSB because of three major reasons. First, the Japanese bank has owner's equity of 95.685 billion yen. Getting it for 50 billion yen translates into a price-to-book ratio of 0.52 and represents an attractive deal for Chinatrust. The yen's devaluation trend makes the purchase even more favourable, analysts said.

Second, TSB has strong wealth management and credit card businesses, which are also Chinatrust's strong points. According to analysts, TSB's "Star One" wealth management service and "Master Debit" cash card are hugely popular in Japan.

With Star One, customers getting cash through ATMs after work hours will get all transaction fees refunded early next month. Such mechanism is especially attractive for Japanese "salary men" or wageworkers.

Finally, Chinatrust is interested in TSB on optimism over future bilateral economic and trade exchanges between Taiwan and Japan. Both countries have signed numerous business deals recently to promote bilateral exchanges.