Sat, May 13, 2006 - Page 12 News List

Stake sale in state-run bank on hold

NOT FOR SALE Shortly after Soo Jin-fong was elected as the bank's chairman yesterday, executives said that Mega Financial's plans to increase its holdings may fall through

By Jackie Lin  /  STAFF REPORTER

Mega Financial Holding Co's (兆豐金控) plans to acquire a stake in Taiwan Business Bank (台灣中小企銀), which is 34.77 percent owned by the government, might be delayed or even fall through, bank executives said yesterday.

State-controlled Mega Financial, the nation's third-largest financial group by assets, announced in December that it planned to buy a 26 percent stake in the bank for NT$10 billion (US$318.5 million), around NT$9 per share, within 12 months.

According to the Financial Holding Company Act (金控法), a financial holding firm can include a financial institution in which it controls more than a 25 percent stake in its subsidiary lineup.

Mega Financial's move was originally designed to help the government pursue its so-called "second-stage financial reform" program, which included halving the number of state-run banks to six by the end of last year.

The Ministry of Finance directed Mega Financial to boost its holding in the smaller bank to 20 percent by next month.

However, the holding company currently only owns a 13 percent stake in Taiwan Business Bank, whose capitalization is NT$42.86 billion, the bank's new chairman, Soo Jin-fong (蘇金豐), told a press conference yesterday.

Soo, 64, served as the bank's president for three years before being appointed to take over as president of the state-controlled Taiwan Cooperative Bank (合作金庫銀行) in July 2004.

After 22 months, he was transferred back to Taiwan Business Bank and was elected as the bank's new chief in a board meeting yesterday morning.

Soo earned a graduate degree from the School of Management at the New York Institute of Technology. His work experience includes deputy secretary general at the Bankers Association of the ROC (銀行公會) and executive vice president at the Land Bank of Taiwan (土地銀行).

Reiterating that he was happy to come home, Soo vowed to continue with organizational restructuring to boost business performance.

"For the sake of the interests of our shareholders, employees and customers, we hope to run our businesses independently and improve the bank's asset quality," he said.

Pressed on the merger plan with Mega Financial, Soo avoided giving a clear answer, only saying that, "We haven't contacted Mega Financial ? Mergers are not the only way businesses can cooperate ? We are open to any cooperative opportunity."

On March 30, the bank's board meeting approved a restructuring program to pay down debt. This will see the firm's capital base reduced by NT$14.12 billion through August, but increased by NT$10 billion through October, resulting in a total increase in the bank's capital adequacy ratio.

Capital adequacy is a measure of a bank's financial strength, usually expressed as the ratio of its capital to its total assets.

Shares of Taiwan Business Bank advanced NT$0.09 to close at NT$8.09 on the Taiwan Stock Exchange yesterday.

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