Mon, Oct 16, 2006 page12

• Taishin, Chang Hwa to seek advisers

  SHARE SWAP While Chang Hwa's board approved plans to hire financial advisers to facilitate the agreement, the Ministry of Finance questioned the board's procedures

  • By Amber Chung / STAFF REPORTER
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  The board of Chang Hwa Bank (彰化銀行) decided in an ad hoc meeting on Saturday to hire financial advisers to decide the terms of a share swap plan with its biggest shareholder Taishin Financial Holding Co (台新金控), the nation's second-largest financial group by assets.

  However, the Ministry of Finance has questioned the board's decision, citing "irregularities" in the handling of the meeting's procedures and called on the bank to convene another meeting.

  Taishin Financial, the nation's second-largest credit card issuer, holds a 25 percent stake in and controls eight of the 15 board seats of Chang Hwa, the nation's seventh-largest lender by assets. The Ministry of Finance has an 18 percent stake in the bank.

  Welcoming the board's decision, Taishin Financial said it would hire its own financial advisers to conduct a fair evaluation, according to Carol Lai (賴昭吟), spokesperson and chief financial officer.

  But "we have no timetable [for the completion of the share swap] at the moment," Lai said in a telephone interview yesterday, dismissing a local newspaper report that the share swap will be completed within a year.

  The Chinese-language Commercial Times reported yesterday that the two companies would proceed with the share swap within the next six months to a year to complete the acquisition, citing Taishin Financial chairman Thomas Wu (吳東亮) as its source.

  But Lai said that Taishin Financial will have Chang Hwa delisted from the Taiwan Stock Exchange after completing the share swap.

  After the swap, Taishin Financial's banking subsidiary, Taishin International Bank (台新銀行), and Chang Hwa Bank will operate independently under their own name for a period to allow employees to adjust to each other's culture before the final integration, she said.

  However, Chang Hwa's board meeting on Saturday did not proceed as smoothly as expected, as the four government-appointed board directors and one private board member walked out to express their dissatisfaction with what they termed "improper procedures."

  According to a report by the Chinese-language Apple Daily, "the walkout was prompted by the discussion of the share swap issue, which was not originally included in the ad hoc meeting's agenda.

  "The government does not oppose hiring financial advisers to conduct a share swap evaluation, but does question the procedure," the report quoted Vice Minister of Finance Liu Teng-cheng (劉燈城) as saying.

  The ministry also issued a statement last night, saying that there were some "irregularities" in Saturday's meeting, such as the changes in the meeting's agenda, and had relayed its concern to Chang Hwa and Taishin Financial.

  The ministry further asked Chang Hwa to convene a new board meeting in compliance with regulatory procedures.

  Meanwhile, Wu said that Taishin Financial has invested more than NT$40 billion (US$1.2 billion) in its bid to acquire Chang Hwa.

  The company is under growing pressure to expedite the merger with Chang Hwa Bank in the wake of Standard Chartered Bank's recent outright acquisition of Hsinchu International Bank (新竹國際商銀), which runs 83 branches nationwide.

  "I can hardly sleep at night every time I think of how local banks can compete with foreign rivals with their aggressive expansion plans," the Commercial Times quoted Wu as saying.

  The inclusion of Chang Hwa into Taishin Financial's umbrella will boost its total number of branches to 270 -- the highest in the country -- enhancing its customer-sharing and cross-selling opportunities, Wu said.

  Chang Hwa's six overseas branches and one representative office in China can also help Taishin Financial's overseas development, he added.

  Taishin Financial also called on the government to keep its promise of support for the winner of the bid for Chang Hwa. The company outbid six competitors with an offer of NT$36.6 billion (US$1.1 billion) for a 22 percent stake in Chang Hwa in July last year.
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