General Electric Co is mulling buying a stake in Cosmos Bank Taiwan (萬泰銀行), a move that might make it the first foreign financial-services company to directly operate business in Taiwan, a government official confirmed yesterday.
The Connecticut, Ohio-based GE, the world's biggest issuer of private-label credit cards, is assessing the possibility of acquiring new shares from the lender, whose board has approved increasing capital by NT$7.28 billion (US$230 million) through a private placement, a local Chinese-language newspaper reported yesterday.
To facilitate the possible merger-and-acquisition (M&A) deal, GE's high-level officials paid a visit to the Financial Supervisory Commission last week to understand relevant regulations, the report said.
Kong Jaw-sheng (
Susan Chang (張秀蓮), the commission's vice chairwoman, said as far as she knows, several overseas companies have indeed expressed interest in investing in Taiwan's banking institutions and are looking for potential targets. However, as information released immaturely might lead to disorder in the market, the parties involved in M&A deals usually remain tight-lipped before deals are inked, Chang said.
"The government looks forward to such deals as long as they are in accordance with the law," she said.
Last October, President Chen Shui-bian (
According to Article 7 of the Financial Holding Company Act (金控法), any shareholder who secures over 25 percent shares in a bank, insurance company or securities firm, is entitled to apply for setting up a financial-holding company.
This means if GE buys into more than one-fourth of Cosmos Bank, it will be able to directly operate financial business in Taiwan.
GE's cash-cow subsidiary General Electric Capital Corp is a global financial services provider, with assets of approximately US$500 billion.
Cosmos Bank, the nation's largest cash-advance card issuer with 62 branches nationwide, reported pre-tax profits of NT$462 million, or NT$0.27 per share, for the first four months of the year, according to the financial statement it filed with the Taiwan Stock Exchange earlier this month.
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