RPT-UPDATE 1-Chinatrust bids $2.4 bln for AIG Taiwan unit-source

(Repeats story first sent on Sept 5)

* Chinatrust outbids three rivals: source

* Primus-China Strategic gives up bid to buy Nan Shan

* Chinatrust's offer is better than what AIG had expected

* Chinatrust stocks rose 1.6 pct on Friday

(Adds details in paras 4, 6, 8-9)

By Faith Hung

TAIPEI, Sept 5 (Reuters) - Chinatrust Financial, Taiwan's
top credit card issuer, offered $2.4 billion for AIG's (AIG.N)
Taiwan Nan Shan Life unit, outbidding rivals, a source with
direct knowledge of the situation told Reuters on Saturday.

Primus Financial, which was competing head-on with
Chinatrust (2891.TW) in acquiring Nan Shan, gave up on its
pursuit after Chinatrust raised its bid to T$80 billion ($2.4
billion), said the source, who is involved in the negotiations.

"Paying that much is suicidal," the source said, referring
to Chinatrust's offer. "It is 100 percent certain Primus is not
in the game any more," he told Reuters via phone.

Chinatrust's latest bid was above market expectations and
was better than the $2 billion target American International
Group (AIG) had expected for Nan Shan, its most expensive asset
for sale in Asia so far.

Three other bidders, including Primus Financial and China
Strategic (0235.HK), the Carlyle Group [CYL.UL] and Fubon
Financial (2881.TW), and Cathay Financial (2882.TW), had offered
less than $1.5 billion each, sources close to the companies said
late in August. [ID:nN28362655]

In an interview with Reuters in August, AIG's new chief
executive officer Robert Benmosche had said he did not favour
shedding assets at any price. [ID:nN26286770]

Officials of Chinatrust and Morgan Stanley (MS.N), the
financial advisor on the Nan Shan deal for AIG, declined to
comment.

New York-based AIG is under pressure to repay more than $80
billion in U.S. bailout loans extended last year, when the
insurer nearly collapsed under the weight of mortgage-related
derivative losses.

Shares of Chinatrust ended up 1.58 percent on Friday, while
the main index .TWII rose 0.68 percent.

($1=T$32.9)

(Editing by Lee Chyen Yee and Ruth Pitchford)