Shares of state-run Taiwan Business Bank (
Taiwan Business Bank's stock prices nose-dived 6.8 percent, to close at NT$11 on the Taiwan Stock Exchange yesterday, while shares of E.Sun Financial slid 5.5 percent to NT$21.4.
"The market is actually bearish about the auction deal," said Wang Chien-ming (
He said that although the state-run lender's situation has somewhat improved, a future buyer will have to fork out a huge amount of money to write off the bank's bad loans, redeem its net value and pay employees' compensation and preferential early-retirement packages.
"This has caused heavy selling pressure for E.Sun Financial's shares," he said, adding that it would be unlikely for the two companies' stock prices to bounce back until the result of the auction deal is announced.
The Ministry of Finance last Friday invited a public bid to shed its holding in Taiwan Business Bank. But to everyone's surprise, no decision was made, as the highest bidding price fell short of the ministry's expectations.
The ministry has allowed the highest bidder to submit a new price within one week, and market rumors have circulated that E.Sun Financial, Taiwan's No. 10 financial holding company, offered the highest price among the three bidders.
Meanwhile, labor unions continued a third day of strikes yesterday to oppose the merger, asking the government to abandon the tender. Employees have decided to assemble at the legislature today when the new legislative session begins to voice their opposition to the privatization.
Their call for a strike starting last Thursday has become one of the reasons why interested bidders did not submit favorable prices, another analyst noted.
"They hope the finance ministry can resolve the strike first, before they take over the bank's management. Therefore, they gave bad bidding prices Friday to delay the process," said Shirley Yang (
Yesterday morning, finance minister Lin Chuan (
Lin refused to disclose the content of the meeting.
"We'll communicate with the highest-price provider regarding the union's requirements, such as early-retirement packages. We're obliged to let the bidder know all the problems they are about to face," Lin said during a press conference yesterday evening.
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