Sat, Sep 09, 2006 - Page 12 News List

Chinatrust to dump its Mega shares

By Amber Chung  /  STAFF REPORTER

Chinatrust Commercial Bank (中國信託商銀) said yesterday that it will offload 8 million shares, or a 0.07 percent stake, in larger rival Mega Financial Holding Co (兆豐金控) onto the open market within the next month to comply with banking regulations.

In a statement released yesterday, Chinatrust said that a plan announced by Mega Financial to cut its capitalization will in turn lift Chinatrust Commercial's shareholding in Mega Financial to 5.07 percent from 4.98 percent.

According to the Banking Act (銀行法) and other regulations, commercial banks are not allowed to control more than a 5 percent stake in each invested company for the sake of risk diversification.

As a result, Chinatrust Commercial will have to dispose of extra shares to meet the requirements. After the disposal, it will control more than 558 million shares, or a 5-percent stake, in Mega Financial, the statement said.

The bank said the share disposal had nothing to do with the Financial Supervisory Commission's demand that its parent Chinatrust Financial Holding Co (中信金控) cut its shareholding in Mega Financial to 6.1 percent from 10 percent within the next year.

In July, the commission demanded Chinatrust Financial offload a 3.9 percent stake in Mega Financial in the open market within the next 12 months, after uncovering new evidence of internal control irregularities.

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