Grand Cathay's assets take a walk.

The article argues that the trouble with financial acquisitions is that the major assets of target institutions--the people--have two legs and will walk out if they do not like the new set-up. This happened on a big scale at Taiwan brokerage Grand Cathay Securities, which was bought by China Development Industrial Bank some months ago. It was the latest in a wave of industry consolidation triggered by new government legislation that allows the setting up of financial holding companies. The acquisition was part of the bank's plan to expand its presence in the market. Its core business is lending to corporates in industrial production. It has also handled equity and fixed income underwriting and has been involved with direct investment. Despite a sluggish market, Grand Cathay managed to complete a number of big New Taiwanese dollar (NT$) bond issues earlier in 2002. Chang Hwa Commercial Bank's NT$20 billion subordinated bank debenture, which Grand Cathay placed in just one week in March 2002, was the largest bank debenture issue ever by a commercial bank in Taiwan.