Sat, Mar 20, 2004 - Page 10 News List

Shinkong signs deal to take over United-Credit

By Joyce Huang  /  STAFF REPORTER

Shinkong Financial Holding Co (新光金控) yesterday signed an agreement to take over United-Credit Commercial Bank (聯信銀行) in late September.

United-Credit, which has NT$70 billion in assets, was formed in July 2000 with the merger of Taichung Sixth Credit Cooperative (台中六信) and Pingtung First Credit Cooperative (屏東一信). It runs 28 outlets nationwide, with an overdue loan rate of around 5 percent as of the end of last year.

"The swap-share deal is estimated to cost [Shinkong] NT$4 billion in total at NT$12.88 per share," Sunny Hsu, deputy spokesperson of Shinkong, said yesterday.

A Chinese-language newspaper reported earlier yesterday that Shinkong would discuss details of the merger at a board meeting later yesterday.

Hsu said yesterday that the company was scheduled to hold a board meeting on June 11 and would finalize its takeover of United-Credit that day. Then it will submit the deal to the Ministry of Finance for approval, he said.

An exact share-swap ratio will also be decided in accordance with the bank's average share price in the month before the merger in September, according to Hsu.

Hsu denied market speculation that the company's board meeting yesterday discussed details of its proposed merger with Shinkong Life Insurance Co (新光人壽).

Before the board meeting, local Chinese-language media speculated that the government may reject Shinkong Financial's application to increase its stake in the family-owned life insurer.

The reports speculated that the government had second thoughts about whether insurers-turned-mega banks should be allowed to use "investors' money" to acquire other banks.

Former finance ministers Lee Yung-san (李庸三) and Paul Chiu (邱正雄) are said to have expressed opposition to such hostile takeovers, according to local media.

But Mark Wei (魏寶生), director-general of the Ministry of Finance's insurance department, yesterday flatly denied the media speculation, saying that "the application is still under review."

Hsu said that, as far as he understood, the ministry was still reviewing Shinkong Financial's plan to raise its stake in the life insurer from 10 percent to 25 percent before a merger can be arranged.

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