Tue, Nov 16, 2004 - Page 10 News List

S&P to take bigger stake in local arm

ACQUISITION DEAL S&P will raise its holdings in Taiwan Ratings to 51 percent, but no ratings policy changes will be made, Taiwan Ratings said

By Joyce Huang  /  STAFF REPORTER

Standard & Poor's (S&P) is expected to officially take up a majority 51 percent stake in its local arm, Taiwan Ratings Corp (中華信評), after acquiring an additional 1 percent of shares from the Taiwan Stock Exchange Corp.

"There's been a verbal agreement on [the acquisition]," Chris Irwin, acting president of Taiwan Ratings, told reporters after the rating agency's quarterly board meeting yesterday afternoon.

"It represents S&P's commitment to deepen its relationship with Taiwan," Irwin said, adding that the acquisition would take place soon, after several details, including prices, are finalized.

Irwin said that no rating policy change will occur should S&P take over the majority stake. He was responding to recent market speculation that local small-and-medium enterprises may face a tougher rating criteria once S&P takes charge.

Terms of agreement

According to the verbal agreement, S&P will take over Taiwan Ratings' management and have the right to nominate its president. The permanent right to nominate its chairman, meanwhile, will be reserved for local government-owned shareholders, which include the stock exchange, Taiwan Securities Central Depository Co (台灣證券集保) and China Credit Information Service Ltd (中華徵信所) -- which will jointly own a 49 percent stake after the deal.

Currently, S&P and the government-owned shareholders take turns nominating the local rating agency's top management every three years.

After agreeing to relinquish 1 percent of shares, stock exchange chairman Wu Nai-jen (吳乃仁) yesterday said that he expects the contributions from S&P will further benefit Taiwan Ratings.

Internationalization

"[We expect] S&P to bring in new rating skills to help the local agency's internationalization," Wu said yesterday, adding that S&P will also share its latest rating information with Taiwan Ratings.

"The local market is too small to bolster Taiwan Rating's operation and we expect the reshuffled ownership will bolster its competitiveness to help it tap into Asian markets," Wu said.

Wu also expressed hope that the acquisition would enhance the local rating agency's ability to compete with two other international rating agencies -- Moody's Investors Service and Fitch Ratings, which have already set up local offices.

The stock exchange currently owns a 19.9 percent stake in Taiwan Ratings while Taiwan Securities Central Depository owns a 20 percent stake.

Wu previously told local media that nationalism was the biggest hurdle to the acquisition proposed by S&P in June last year, which he said was a meaningless mindset.

Meanwhile, the board of Taiwan Ratings yesterday approved the appointment of a new president.

According to Irwin, the appointee is an experienced financial expert currently working in a local financial institution, and will take up the position in late December.

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