Wed, Dec 13, 2006 - Page 11 News List

Observers have mixed reaction to rumored Chinatrust buyout

By Amber Chung  /  STAFF REPORTER

Market watchers yesterday had mixed reactions to the rumored buyout by foreign financial institutions of Chinatrust Financial Holding Co (中信金控), the nation's fourth-largest financial group by market value.

"It's possible, as Chinatrust could then bypass the government's regulations to break into the Chinese market," said Shirley Yang (楊慶麒) a fund manager at Invesco Taiwan Ltd (景順投信).

Analysts say that foreign shareholders -- which control 53 percent of Chinatrust -- are in favor of the sale but cannot reach agreement on an offer of NT$30 (US$0.92) per share from the potential buyers, Yang said.

The Koo family could still retain their control and ownership of Chinatrust after the buyout, which would be similar to the case of US Carlyle Group's buyout attempt of Advanced Semiconductor Engineering Inc (ASE, 日月光半導體), she added.

However, Sophia Cheng (程淑芬), head of equity research at Merrill Lynch, said the likelihood of Chinatrust buyout was remote.

The ASE model may prevail in the high-tech sector, but not necessarily in the banking sector whose customers are the mass public, Cheng said.

"The priority for the Koo family is to repair their reputation [after the investment scandal with Mega Financial Holding Co (兆豐金控)], especially because of the uncertainty that heir Jeffery Koo (辜仲諒) could be sent to jail," Cheng said.

It is likely for the Koo family to introduce major foreign investors who can

control some board seats, but not to sell out the whole company, Cheng said.

She also stressed that private equity institutions that want to cash in on

China's banking market can directly target Chinese banks and need not bother

to take over Taiwanese lenders to achieve that end.

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