Chang appointed to First Financial chairmanship

Michael Chang (張兆順), incumbent chairman of state-controlled Taiwan Business Bank (台灣企銀), confirmed yesterday that he will take over the chairmanship of First Financial Holding Co (第一金控).

"I accepted the Ministry of Finance's offer to take up the long-vacant post on Wednesday," Chang said in a phone interview yesterday.

Restructuring will be his first priority after assuming the office of the nation's fifth largest financial group by assets, Chang said.

Chang wouldn't reveal any details of his restructuring plan, although he did say that it would not involve any layoffs.

First Financial is likely to form strategic partnership with foreign financial institutions in the future in a bid to sharpen its marketing and new product design capabilities, he added.

Chang's appointment, however, sparked market speculation about government plans to sell the financial holding firm.

"Based on his past performance, Chang could be a tool for the authorities to implement certain policies," SinoPac Securities Corp's (建華證券) finance analyst Chu Yu-cun (朱玉君) said.

It is likely that Chang could promote the sale of First Financial as a trigger for the government's consolidation plan to halve the number of financial holding firms to seven by year end, Chu said.

Chang yesterday downplayed the rumors, saying that he "was not appointed for this reason."

Chang, 58, a certified public account, started his banking career as a superintendent of First Commercial Bank (第一銀行) in 2001, helping to revamp the bank's assets through large-scale write-offs of NT$74 billion (US$2.32 billion) in bad debt, in compliance with the government's first-stage financial reform.

In 2004, Chang was appointed to chair the ill-performing Bank of Overseas Chinese (華僑銀行). During his 408-day chairmanship, Chang revitalized the NT$18-billion debt-ridden lender by reducing the bad debt ratio from 13 percent to 2.5 percent and introducing private capital from Polaris Financial Group (寶來集團) and New York Life International LLC.

Last September, Chang was appointed to head Taiwan Business Bank after the lender's failed share sale. Under his leadership, the bank's defaulted loan ratio has dropped to 2.35 percent from around 4.6 percent through huge write-offs of over NT$13-billion in bad debt.

Improved performance had prompted state-controlled Mega Financial Holding Co (兆豐金控) to acquire a 26-percent stake in the bank by the end of this quarter. Taiwan Business Bank is slated to be merged in the next three years, in accordance with the government's goal of consolidating state banks.

On the strength of his achievements and, reportedly, close ties to the first family, Chang beat out rivals rumored to include Land Bank of Taiwan (土地銀行) Chairman Tsai Jer-shyong (蔡哲雄) and Hua Nan Financial Holding Co (華南金控) President Hsu Teh-nan (許德南).

Responding to Chang's appointment, First Bank Industrial Union (第一銀行產業公會) said they will closely monitor the new chairman's policies in the future.

"We expect a long-term, committed chairmanship, not just the short-term measures that Chang instituted at Taiwan Business Bank," First Bank Industrial Union Chairman Chi Sheng-li (紀勝利) said.

First Financial employees were counting on Chang to ensure the bank's sustainable operation, rather than put it up for sale, Chi said.

First Financial is slated to hold a board directors meeting to approve the appointment next Monday.