Wed, Jul 26, 2006 - Page 12 News List

Government may sell off Fuhwa Financial Holding

By Jackie Lin  /  STAFF REPORTER

In line with its general plans for privatization, the government intends to sell off its shares in Fuhwa Financial Holding Co (復華金控) next year and assess the possibilities of doing likewise in several other state-controlled financial institutions, a government official said yesterday.

Through the state-run Bank of Taiwan (台灣銀行) and Land Bank of Taiwan (土地銀行), the government currently owns a 14 percent stake in the nation's 11th-largest financial holding firm, making it the institution's third-largest shareholder with two seats on the Fuhwa's nine-member board of directors.

Yuanta Group (元大集團) occupies four seats on the Fuhwa Financial board, while the Chinese Nationalist Party (KMT) controls three seats through the Central Investment Holding Co (中央投資公司).

Yuanta Group has boosted its stake in the firm from 30 percent last year to more than 55 percent and is expected to gain more seats after a board reshuffle scheduled for September.

At that point, the government will have less influence on the firm's decision-making and might as well reduce its share to zero, an official at the Ministry of Finance said on condition of anonymity.

This decision is also in line with the consensus reached by the finance panel organized for the Conference on Sustaining Taiwan's Economic Development, according to the official.

The panel suggested that the government retrench its stockholding in state-run enterprises which no longer bear policy responsibilities. Selling government holdings in these enterprises will also help boost their corporate governance, the panel suggested.

As for the Waterland Financial Holdings Co (國票金控), where the government maintains two director seats through its primary holdings in Taiwan Cooperative Bank (合作金庫銀行) and the International Commercial Bank of China (中國國際商銀), Taiwan Cooperative will conduct an impact assessment before deciding whether share sales should go ahead.

However, the government's stake in Mega Financial Holding Co (兆豐金控) will be retained, the official said. Mega Financial faced a hostile takeover by Chinatrust Financial Holding Co (中信金控) several months ago, which was recently penalized for its controversial investment in Mega Financial.

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