Chinatrust calls for lifting of bans

Despite prosecutors' probes into a disputed takeover bid of Mega Financial Holding Co (兆豐金控), Chinatrust Financial Holding Co (中信金控) said it will not give up any acquisition opportunities in both local and overseas markets and will talk with the authority about the future handling of its Mega Financial holdings.

"We will consult with the Ministry of Finance first and decide whether to dispose of or increase our holdings in Mega Financial," Charles Lo (羅聯福), chairman of Chinatrust Commercial Bank (中國信託商銀), the flagship unit of the nation's seventh largest financial group, told a press conference yesterday.

Chinatrust Financial and its banking unit currently hold an 11.1 percent stake in state-controlled Mega Financial.

In July, the Financial Supervisory Commission banned Chinatrust Financial's expansion, investment, and fundraising plans, penalizing the company for misuse of funds and improperly benefiting a third party during its purchase of the Mega Financial stake. The commission required it to offload a 3.9 percent stake in Mega Financial acquired through a flawed process.

Lo yesterday called on the commission to scrap the penalties as early as possible, as the restrictions have affected the firm's overseas operations.

Chinatrust Financial has 70 bank outlets worldwide, contributing 15 percent of its annual profits, according to the company.

The commission's secretary- general, Austin Chan (詹庭禎), yesterday declined to comment on whether the commission would consider lifting the bans in the near future.

But Chan said the commission had completed a financial inspection of Chinatrust's improvements in internal control required by the regulator and is compiling the information into a report.

Lo said Chinatrust Financial will not change its expansion plan through organic growth or acquisition in home and overseas markets.

"A 5 percent market share is not enough ... and we will not change our merger and acquisition strategy," Lo said.

"We are ambitious about overseas expansion, which is our focus in the future," he said.

He also said the introduction of strategic foreign investors to dilute family holdings was not a priority of the financial holding firm.

"Do you think it is possible?" Lo said when answering reporters' questions about the plan for the Koos family to gradually step aside from the management lineup.

"Chairman Jeffrey Koo (辜濂松) created and developed the business from scratch. The company is like one of his children," Lo added.

The restructuring of the board members lineup to get rid of the family business image is crucial to Chinatrust Financial, said Jesse Wang (王嘉樞), head of equity research at BNP Paribas Securities (Taiwan) Co.

"The company will not be able to win [investors'] trust if they cannot make improvements," Wang warned.

Meanwhile, the Ministry of Finance yesterday said it is just a shareholder of Mega Financial and has no position to comment on how Chinatrust Financial should deal with its shareholding in the state-run financial institution.

If the financial regulator demands that Chinatrust Financial dump all its shares in Mega Financial, Chinatrust Financial's four board seats will therefore be dissolved.

As two private directors on the 15-member board resigned in June, a total of six vacancies on the board will lead to a by-election in accordance with regulations, said Deputy Minister of Finance Liu Teng-cheng (劉燈城).