SinoPac Financial to buy back NT$3bn in shares

SinoPac Financial Holding Co (建華金控) announced yesterday that it would buy back NT$3 billion (US$90.6 million) in shares in stages in a bid to raise earnings for shareholders and enhance financial performance.

The financial holding firm is slated to buy back 50 million shares on the open market in the first stage, from today until Feb. 26.

"Our overseas shareholders who control up to a 48 percent stake have expected us to cut paid-in capital in order to lift earnings per share," SinoPac Financial's incoming chairman Ho Shou-chuan (何壽川) told a press conference yesterday.

Ho, chairman of the International Bank of Taipei (IBT, 台北商銀), was yesterday selected by the SinoPac Financial board to replace Edward Chien (簡鴻道). The appointment will take effect on Sunday.

SinoPac Financial is planning cash dividends of NT$0.7 per share, according to the financial holding firm's chief executive officer, Paul Lo (盧正昕).

RETURN ON EQUITY

The share buyback will help the group build up return on equity (ROE), SinoPac Financial spokesman Richard Chang (張立荃) said. The company hopes to boost ROE to 15 percent within the next three years, up from around 9 percent currently, he said.

Share prices for SinoPac Financial were down 3.26 percent at NT$16.3 on the Taiwan Stock Exchange. The share buyback plan was announced after the stock market closed.

SinoPac Financial officially took over the International Bank of Taipei yesterday, replacing Taishin Financial Holding Co (台新金控) as the nation's eighth-largest financial group with NT$1 trillion (US$30.2 billion) in assets, up from ninth place.

The merged financial group will serve 2.5 million clients and operate 129 branches nationwide, the company said yesterday.

SinoPac Financial expects to create earnings of NT$10 billion, or around NT$1.39 per share next year, up from some NT$5.4 billion, or NT$0.76 per share, this year.

The merger will attract an estimated NT$3 billion in synergy benefits in the next three years. Up to NT$600 million will be reaped next year, Chang said.

NO RETRENCHMENTS

SinoPac Financial does not have plans to cut its workforce, Lo said. Instead, the lender will hire more staff and continue to look for acquisition opportunities in Taiwan and abroad after integration is complete by the end of the second quarter next year, Lo said. He cited several Hong Kong banks as ideal targets.

The group's banking and securities operations in Hong Kong, Vietnam and the US accounted for one-third of its profits and are expected to see 10 percent growth next year, he said.