Fitch affirms merging Taiwan banks

Fitch Ratings said it affirmed all the ratings of Industrial Bank of Taiwan, China Bills Finance Corp. and IBT Securities Co., Ltd., following the agreement to merge the banks through a share swap in April 2009. China Bills Finance will be the surviving entity and will adopt Industrial Bank of Taiwan as the merged entity's new name.

China Bill's long-term foreign-currency issuer default rating is affirmed at BBB, short-term foreign-currency issuer default rating at F3, national long-term rating at A+(twn) and national short-term rating at F1(twn). The outlook is stable.

IBT Securities' national long-term rating was affirmed at A-(twn) and national short-term rating at F2(twn).

Fitch said it views the merger positively as the merged entity should benefit from an enlarged wholesale banking franchise and enhanced product and revenue diversity.

IBT Securities could possibly expect stronger parental support from the merged entity, which is expected to have a stronger funding capacity and a capital base that is about 1.5x of its current level, the agency said.

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