Mega won't seek seats on China Development's board

Mega Financial Holdings Co (兆豐金控), the nation's third-largest lender, said it increased its stake in rival China Development Financial Holding Corp (中華開發金控) as a "short-term" investment.

The company denied an earlier Chinese-language newspaper report that it plans to seek seats on the bank's board.

The company's International Commercial Bank of China (中國商銀) unit bought 15 million shares of China Development Industrial Bank (中華開發銀行) earlier this month, said Mega Financial spokesman Simon Dzeng (曾垂紀).

The unit also owns 144 million shares, or 1.34 percent of China Development, as a "long-term"investment, he said.

"We have no plan, as the news report stated, to seek several seats on China Development's board by increasing our investment,'' Dzeng said.

The new investment was made because Mega considered China Development's stock to be cheap, he said.

China Development shares fell 5.3 percent this year, compared with a 26 percent gain for the TAIEX.

Mega Financial or its units would consider buying more shares in the bank depending on the price, and their investment goals, Dzeng said.

China Development spokeswoman Grace Fang (方鳳山) said she was unaware of any plan by Mega Financial to obtain board seats, and that as a publicly traded bank, China Development welcomes all investors.

China Development expects to be in merger or acquisition talks by the end of the year and has "many candidates in mind," chairwoman Diana Chen (陳敏薰) told reporters yesterday at a meeting in Taipei.

Chen also said that the company, the nation's fourth-largest financial services company, would return to profitability next year.

The government passed laws in 2001 to encourage mergers and improve competition in its financial industry, allowing holding companies to acquire lenders, brokerages, insurers and money managers.