TAIPEI, Oct 2 Cathay Financial 2882.TW, Taiwan's top financial holding firm, won

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TAIPEI, Oct 2 (Reuters) Cathay Financial <2882.TW>, Taiwan's top financial holding firm, won an auction for failed bank China United Trust&Investment (CUTIC), the government said on Tuesday, as consolidation of the overcrowded banking sector speeds up.

The government will pay Cathay T$12.9 billion ($397 million) for the company's banking arm to take over some of the small lender's assets, primarily its 20-branch network, a government official said.

Pressure has been rising on foreign and local banks to make acquisitions in Taiwan, Asia's fourth-biggest market, after Citigroup and Standard Chartered <2888.HK> paid US$426 million and US$1.2 billion, respectively, for two Taiwan lenders.

''The bidding result is a good thing for the banking sector,'' said Lawrence Pan, executive vice president of government-owned Central Deposit Insurance Corp, which oversaw the auction.

Chinatrust Financial <2891.TW>, Taiwan's largest credit card issuer, recently won an auction for failed lender Enterprise Bank of Hualien.

In June, Dutch bank ABN AMRO obtained the branch network of distressed Taitung Business Bank via a similar auction.

The CUTIC auction was completed after the Taipei stock market closed on Tuesday. Cathay shares had risen 5 percent, beating a 1.4 percent gain on the broader TAIEX market <.TWII>.


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