Taiwan Business' union wins key role

The union of the state-controlled Taiwan Business Bank (台灣企銀)

outmaneuver rivals to win a crucial seat in the bank's board reshuffle

yesterday, which could create problems for Mega Financial Holding Co's (兆豐

金控) takeover bid.

It is the first time in the financial sector that union representatives have won the most board seats and garnered the highest number of votes for single candidate, who therefore is entitled to convene the new board.

During the six-and-half-hour-long annual general meeting the union won three of the 15 board seats and one of five supervisor posts by winning proxy votes from shareholders representing a 10 percent stake in the lender.

The Ministry of Finance and other state banks that collectively control about 35 percent of Taiwan Business won nine board seats and three supervisor posts.

State-controlled Mega Financial, which holds around a 14 percent stake in the bank, secured two board seats and one supervisor post, while private China Manmade Fiber Corp (中國人造纖維) and its supporters won one board seat.

"We will endeavor to safeguard Taiwan Business' independence against any takeover bids," said Lin Wan-fu (林萬福), chairman of the Taiwan Business Bank Industrial Union.

Union leaders will call a meeting next week to discuss strategy before its elected representative convenes the next board meeting on June 14 to select managing directors, Lin said.

Union representatives will seek managing directorships, Lin said, although he refused to say how many.

The union has a history of setting records. It launched the first industrial action in the financial sector last September -- a move that deterred E.Sun Financial Holding Co (玉山金控) from acquiring the government's shareholding in an auction.

"A tough labor organization is a factor that we have to consider in the future," Mega Financial's acting spokesman Simon Dzeng (曾垂紀) told the Taipei Times in a telephone interview yesterday.

Mega Financial will communicate with the union in board meetings, he said.

The company would look at employees' rights and interests before taking any steps, he said.

Mega Financial, the nation's third-largest financial group by assets, said last December that it planned to buy a 26 percent stake in Taiwan Business for NT$10 billion (US$308.2 million), around NT$9 per share, within 12 months.

The buying plan would go ahead as scheduled, Dzeng said.

Acting Financial Supervisory Commission Chairman Lu Daung-yen (呂東英) welcomed possible mergers that occur through market mechanisms while protecting employees protection and enhancing synergy.

"How would employees oppose merger offers if those protected their rights and interests and meant a better future for the company?" Lu said yesterday.

In other developments at yesterday's annual meeting, shareholders approved Taiwan Business' capital restructuring plan to revamp its financial structure by cutting NT$14.12 billion, or 32.949 percent, of its capitalization and then raising NT$10 billion later this year.

The lender posted NT$4.21 billion in earnings for the first five months of this year, up by 4.2 percent from the same period a year earlier.

Shares closed up 1.74 percent to NT$7 yesterday.