Tue, Jun 05, 2007 - Page 12 News List

Mega Financial waiting for government to ask for help

By Amber Chung  /  STAFF REPORTER , WITH BLOOMBERG

Mega Financial Holding Co (兆豐金控), the country's third-largest financial group by assets, would look into buying a larger stake in Taiwan Business Bank (臺灣企銀) if the government makes such a request, a company executive said yesterday.

``If the government asks us to consider the plan in a written statement, we'll evaluate it carefully,'' Simon Dzeng (曾垂紀), executive vice president of Mega Financial, said in a telephone interview.

The government is reviving plans to consolidate the financial industry, Premier Chang Chun-hsiung (張俊雄) said on Saturday.

The Ministry of Finance has demanded Mega Financial reevaluate acquiring Taiwan Business, in which the government holds 43 percent, the Chinese-language Economic Daily reported yesterday, citing unnamed sources.

The government aims to sell its holding in Taiwan Business Bank in the third or fourth quarter of this year, the report said.

Taiwan Business and Mega Financial shares yesterday gained 0.53 percent and 0.24 percent to NT$9.55 and NT$20.8 respectively on the Taiwan Stock Exchange.

Earlier this year the financial holding firm shelved a plan announced in December 2005 to raise its holding in Taiwan Business to 26 percent from a then 8 percent. It now owns more than 13 percent of the bank.

"The indicators of the lender's financial health have improved, but not much," Dzeng said.

Taiwan Business Bank's nonperforming loan ratio was 2.5 percent at the end of March, above the industry average of 2.32 percent, according to Financial Supervisory Commission data.

Mega Financial's top priority is to increase the profit contribution from overseas operations to more than 50 percent this year from around 43 percent last year, Dzeng said.

"We're looking into acquisitions in Southeast Asia, and possibly Hong Kong, to increase our wealth-management business," he said, declining to give further details.

Meanwhile, Shin Kong Bank said it is mulling forming a strategic partnership with larger foreign rivals through a share sale to tap markets overseas.

"We are open to a partnership and we would like to team up with globally renowned, moneymaking banks to make inroads into the overseas Chinese markets," Victor Hsu (許澎), spokesman of Shin Kong Financial Holding Co (新光金控), said in a telephone interview.

The company plans to sell up to 30 percent of the bank's shares, but not shares in the parent holding firm, because they do not want to give up control, Hsu said, adding that no timetable had been set.

Shin Kong Bank has 108 outlets nationwide and has applied to set up a branch in Hong Kong and a representative office in Vietnam to serve Taiwanese customers.

Unstimulated by the news, shares of Shin Kong Financial, the nation's eighth-biggest financial group by assets, fell 1.87 percent to NT$34.10 in Taipei yesterday.

Hsu said some overseas lenders had approached the bank to express interest in the huge insurance network under its financial group umbrella but no agreement had been reached yet. He declined to name the interested investors.

The company was still looking at buying local rivals, but not troubled ones, because of concern over poor assets, Hsu said.

"Prices matter," Hsu said when asked if the company would be interested in buying any state-owned shares as the government resumes its second-stage financial reform.

Shin Kong Financial chairman Eugene Wu (吳東進) said last year that the firm was interested in state-controlled First Financial Holding Co (第一金控), in which it reportedly holds an more than an 8 percent stake.

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