Cathay Financial Holding Corp (
Cathay bought nearly 99.52 million shares in Lucky Bank, a smaller bank in central Taiwan with 32 branches, paying NT$16 per share, the filing said.
"To Cathay, this is an investment at this stage, and whether we make a further move or plan with the bank depends on future developments between the two companies," Lee Chang-ken (
Lee said the investment is a good deal as Lucky Bank's financial health is good, reporting per-share earnings of NT$1.53 last year.
Lucky Bank's first quarter earnings declined by 25 percent to NT$132.22 million, or EPS of NT$0.42, from the same period last year.
Although reluctant to reveal whether Cathay intends to acquire Lucky Bank to expand its presence in the banking sector, Lee said the company is keen to look for further merger and acquisition opportunities.
The government is encouraging consolidation in the financial sector, and hopes to create two or three banks with at least 10 percent market share, a level of domination that no bank currently enjoys.
Cathay wants to beef up its banking unit Cathay United Bank (國泰世華銀行), which now accounts for significantly more earnings than its once-core business Cathay Life Insurance (國泰人壽), the nation's top life insurer. Cathay, however, only commands about a 4 percent share of Taiwan's banking market.
Cathay United Bank posted net income of NT$5.54 billion, or NT$1.28 per share, for the first five months of the year.
Cathay's share acquisition was not welcomed by the management of Lucky Bank, however, as the Taichung-headquartered lender appears to be trying to fend off unsolicited takeover bids.
"This is a decision by some shareholders, not by all shareholders," said Su Tian-you (蘇天佑), Lucky's president. "They need a two-thirds stake to control management and that is not so easy."
Shares of Cathay fell NT$0.2 to close at NT$61 on the Taiwan Stock Exchange yesterday.
Lucky is not listed on the local bourse.
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