Gov't pans Chang Hwa Bank's Taishin bid
By Ted Chen,The China PostTAIPEI, Taiwan -- The Ministry of Finance (MOF) yesterday expressed disapproval over Taishin Financial's attempt to have Chang Hwa Bank acquire its banking subsidiary, saying that the deal is against the public's interest.
February 21, 2013, 12:04 am TWN
The ministry's statement was a response to an announcement made by Taishin Financial that its board members have passed the motion to recommend the acquisition take place.
Citing recent signs of an economic recovery, Taishin's board asserted that the merger will prove the administration's resolve and conviction in initiating financial reform and promoting cross-strait prosperity under ECFA.
According to reports, Taishin Financial was to hold a board meeting yesterday to finalize the acquisition deal, which would set the stage for the government to carry out a new round of financial reforms.
After the meeting yesterday, Taishin President Rao Shi-shen said the company had already proposed the idea to the MOF before the Chinese New Year break.
“It is still too early to discuss details of the acquisition, for example whether there will be a new name for the bank,” he said.
The MOF meanwhile rebutted speculation that the government will begin a new round of financial reforms, saying such reports are “exaggerated.”
The ministry also reiterated its stern opposition to the Taishin deal, implying that further efforts in lobbying for its support will bear no fruit.
Deputy Finance Minister Tseng Ming-chung (曾銘宗) said that Taishin Financial's attempt to control the much-larger Chang Hwa Bank with its scant 22.55 percent of shareholdings is a threat to the interests of Chang Hwa Bank's multitude of business partners, customers and employees.
Tseng added that despite the appearance of Chang Hwa Bank acquiring Taishin's banking subsidiary, the deal would actually result in Taishin Financial effectively asserting its control of Chang Hwa Bank.
Taishin in 2005 purchased a 22.5-percent stake in Chang Hwa Bank with NT$36.568 billion, becoming its largest shareholder. Subsequently, Taishin boosted its holding in Chang Hwa to 25 percent.
Yet the positive effects of the merger haven't fully played out over the past seven years, prompting Taishin to call for a reversal of the deal, namely to have Chang Hwa purchase Taishin.
Shares of Chang Hwa Bank and Taishin Financial surged yesterday morning, both rising by over 5 percent. In the afternoon, momentum waned for the stocks. Chang Hwa closed at NT$17.35, up 3.58 percent, while Taishin closed at NT$12.7, up 3.67 percent.
Tseng yesterday also rebuked media reports alleging that Taishin Financial Chairman Thomas Wu (吳東亮) had personally visited high-ranking MOF leaders to reach an understanding.