Taiwan asks Mega Financial to study merger with Chang Hwa Bank -papers

TAIPEI (REUTERS) - Taiwan's finance ministry has asked state-run Mega Financial to evaluate the possibility of merging with rival Chang Hwa Bank in what could be the biggest merger in the banking sector in more than a decade, local newspapers reported on Monday.

Mega's top executives have received instructions from the ministry, which is in charge of state-run financial institutions, to study the potential merger, Economic Daily and Commercial Times reported.

A successful merger would have a combined net value of more than T$100 billion (S$4.22 billion), the papers said.

Taiwan's banking sector has struggled with steep price cuts and one of Asia's lowest return on assets (ROA) partly because the sector is fragmented.