China Development fight begins

China Development Financial Holding Corp (開發金控) chairwoman Diana Chen (陳敏薰) has begun campaigning to keep her position ahead of a shareholders meeting on April 5.

"The incumbent management team is performing very well, which I believe the corporation's 600,000 shareholders will recognize," Chen told reporters yesterday at a Lunar New Year celebration.

Despite being hand-picked by former China Development chairman Liu Tai-ying (劉泰英), Chen owns only 0.11 percent of the company's shares, fueling speculation that her position is weakening as Liu's influence in the company wanes.

In response, Chen yesterday said that "individual shareholders, whose influence can't be ignored, will be our major source of support." She refused to reveal who she has been in talks with.

Making things worse, the Ministry of Finance (MOF) last month announced plans to revise the Financial Holding Company Act (金控法) to prohibit subsidiaries with stock in their parent companies from voting to elect members of their boards.

Market watchers have since coined the ministry's planned law revision as the "Diana Chen clause" and have interpreted it as a warning to China Development Industrial Bank (CDIB, 開發工銀) against using its 7 percent stake to vote for Chen in April.

The ministry's move was also viewed as a sign the ministry, which owns 8 percent of China Development, wanted Chen removed.

Finance Minister Lin Chuan (林全) has continually denied speculation that the government has decided to topple Chen, saying that Chen's future will be decided by China Development's board.

Internally, no one has come forward to contest the seat, although the media has speculated that CDIB chairman Benny Hu (胡定吾) and his faction may be interested.

Externally, Chinatrust Financial Holding Co (中信金), led by vice chairman Jeffrey Koo (辜仲諒), has been aggressively buying shares to gain influence in the board election at China Development, the nation's fifth-largest financial service company by market value.

The media has speculated that Chinatrust has acquired more than 6 percent of China Development's shares, which may guarantee Chinatrust one or two seats on China Development's new board if it wins the support of the government's 8 percent stake.

Other speculation suggests that former chairman Liu has ganged up with Chinatrust to take a controlling stake in order to play an important role in the April election.

However, Hu yesterday said "the chance is slim" of this happening.

Hu also denied he had been seeking Chinatrust's support, saying any campaign to recruit authorization letters from shareholders will only be meaningful after Feb. 5, when shareholders' voting rights are finalized and confirmed.