Mega Financial postpones date of merger to Aug. 21

Mega Financial Holding Co (兆豐金控), the nation's third-largest financial service provider, announced yesterday that it was changing the effective date for the merger between its wholly owned International Commercial Bank of China (ICBC, 中國國際商銀) and Chiao Tung Bank (交通銀行) from June 26 to Aug. 21.

The delay resulted from the lengthy review process of the registration of the new bank entity after merger by foreign regulators in the overseas markets, Mega Financial's spokesman Joseph Shieh (謝劍平) said.

This was the second postponement after Mega Financial first put off the merger date from March 27 to June 26.

Although it would be the surviving entity, ICBC's union has been resisting the merger as it opposes renaming the bank.

Mega Financial's management plans to change the merged banking unit to Mega Commercial Bank Co (兆豐國際商銀). The ICBC union argued that this would mean losing its long brand history and valuable market recognition.

Name change

"We are proud of our brand name with a history that dates back more than 100 years," ICBC union chairman Tsai Chiu-far (蔡秋發) said. "It is not an easy task to build a reputable brand, and we believe it is not in our favor to make the change."

The bank was first established under the name Hupu Bank (戶部銀行) in 1904 during the Qing Dynasty. It is the oldest government owned and operated bank in Chinese history.

News of Mega Financial's plan to postpone the merger of its two banking units came on the eve of the financial service provider's annual shareholders' meeting today.

The union plans to mobilize up to 500 employees to hold a demonstration during the annual meeting to protest against the controversial takeover bid by Chinatrust Financial Holding Co (中信金控) and the government's passive attitude in defending its state shareholding.

So far, Chinatrust Financial has acquired a 15.63 percent stake in Mega Financial, while the government controls 22.78 percent.

Chinese Nationalist Party (KMT) legislators said yesterday that Premier Su Tseng-chang (蘇貞昌) and Minister of Finance Joseph Lyu (呂桔誠) should step down if private shareholders attained a majority on Mega Financial's board of directors.

Board contest

"If the government secures less seats than those who represent private shareholders do, it means that Su and Lyu failed to fulfill their duty of guarding a national asset," KMT legislative caucus whip Pan Wei-kang (潘維剛) said.

KMT Legislator Alex Fai (費鴻泰) called on Su to reject President Chen Shui-bian's (陳水扁) arrangement, which he described as favoring the retention of Cheng Shen-chih (鄭深池) as Mega Financial's chairman to represent private shareholders.

KMT legislators said they would stage a demonstration outside Mega Financial's annual shareholders' meeting today.

Meanwhile, People First Party Chairman James Soong (宋楚瑜) said yesterday that the party would come up with a motion to topple the Cabinet if the government loses control of the company.

But Democratic Progressive Party Legislator Lin Chung-mo (林重謨) said that if the government was disadvantaged, it is the KMT that should be blamed rather than the government.

"Mega is actually controlled by Chinatrust Financial, whose chairman Jeffrey Koo (辜濂松), is a KMT central standing committee member," Lin said.

He said that the government had been working hard to persuade Chinatrust Financial from cooperating with other private shareholders.