MOF to aid Chang Hwa bid winner

The Ministry of Finance yesterday said it will help the winning bidder for 1.4 billion new shares of Chang Hwa Commercial Bank (彰化銀行) to gain management control of the nation's sixth-largest lender by assets, as part of the government's banking reform efforts.

The ministry endorsed supporting the winning bidder in acquiring a majority of seats on the bank's board of directors and supervisors, the statement said.

The share sale "is aimed at bringing in a strategic investor," the ministry said in the statement.

Chang Hwa plans to sell 1.4 billion preferred shares owned by the ministry in an auction today.

The 1.4 billion new shares, representing a 22 percent stake in Chang Hwa, will cost a bidder at least NT$25.17 billion (US$786.6 million) based on the offering's floor price of NT$17.98 a share which Chang Hwa's board set on June 24.

Singapore's state-owned Temasek Holdings appeared to be the most likely winner of the auction, reportedly offering over NT$19 per share, higher than the competing bids from rivals Taishin Financial Holding Co (台新金控), Fubon Financial Holding Co (富邦金控) and state-run Mega Financial Holding Co (兆豐金控).

Chang Hwa has nearly 170 branches nationwide and enjoys a 5.2 percent share of the nation's lending and deposit markets.

The results of the sale will be announced later today. It will be a milestone in the government's financial reforms, which aim to halve the number of state-owned banks to six by the year's end and expand the market share of one to three banks to over 10 percent.

Additionally, the ministry said that if the winning strategic investor plans to acquire the government's shares, it will have to first seek legislative approval, the statement said. Otherwise, the government's stake will be sold on the open market, it said.

The ministry's current shareholding amounts to a 12 percent to 13 percent stake in Chang Hwa.

In related developments, Chinatrust Financial Holding Co (中信金控), the nation's sixth largest financial service provider by assets, yesterday downplayed a report that Temasek will try to recruit its president, Eric Chen (陳聖德), if it acquires the stake in Chang Hwa.

"The report is just a rumor, not the truth," Chinatrust Financial's spokesman Lin Shiaw-pin (林孝平) said in a phone interview yesterday.

Chen does keep contact with former colleagues who now work for Temasek, to talk about Taiwan's finance sector, but he is not involved in Temasek's tender for Chang Hwa's shares or its operation plan after acquiring the bank, Lin cited Chen as saying.