Chang Hwa union issues strong warning

The labor union of Chang Hwa Bank (彰化銀行) yesterday warned that employees would take strong action against any merger resolutions made by the board, now controlled by Taishin Financial Holding Co (台新金控), after its chairman unexpectedly resigned on Monday night.

"We request that the successor be one of the government-appointed board members to safeguard the state bank's massive assets," the union said in a press release yesterday.

Taishin Financial has sought to take full control of the bank and the union will "protest against all decisions made by the board controlled by the company," the statement read.

Chang Hwa chairman Chang Po-shin (張伯欣) said he would step down on Monday, saying his seven-year term was lengthy enough and did not conform to normal practice in developed countries. His resignation was effective yesterday.

Chang's resignation reportedly involved a power struggle with Taishin Financial. But speculation also linked Chang's resignation to alleged jobbery involving questionable outsourcing to a company affiliated with him.

The Financial Supervisory Commission yesterday did not comment on Chang's resignation, but admitted it had received a report on an investigation regarding the matter completed by the bank's supervisor.

Taishin Financial president Lin Keh-hsiao (林克孝) said the company planned to invite a former minister of finance to be the next Chang Hwa chairman, adding the candidate must be both experienced and senior.

He did not give names.

Chang Hwa will hold a board meeting of standing directors to select an acting chairman this morning to maintain the lender's normal operations, said Tsai Ching-nain (蔡慶年), director general of the ministry's National Treasury Agency, yesterday.

While Taishin Financial chairman Thomas Wu (吳東亮) had said the company would consult the government to select a candidate acceptable to the government and the company employees, the Ministry of Finance said yesterday that Wu had yet to approach the ministry to discuss the matter.

Possible candidates were believed to include Taishin-appointed director Henry Kao (高志尚) and Chang Hwa president Julius Chen (陳淮舟), former president of Taishin Financial.

Taishin Financial acquired a 22.5 percent stake and eight of 15 board seats in Chang Hwa in 2005.

"We expect the merger to accelerate after the incident and to happen by the end of this year at the earliest," said Fiona Uang (汪姵吟), an analyst at Mega Securities Corp (兆豐證券).

Chang's resignation was a positive turn of events for Taishin Financial, she said.

In response, Chang Hwa spokesman James Shih (施建安) said the merger was an inevitable outcome and that the only question remaining was when it would take place.

"We think hiring financial advisors [to evaluate a share swap] will happen very soon," Shih said.

Taishin Financial said in April it hoped to complete the share swap by the end of this year, paving the way for a takeover.

Taishin Financial spokesperson Carol Lai (賴昭吟) said the company would promote the merger when "the time is right."

"The government has resumed the second stage of the financial reform for consolidation, which is advantageous to our plan," she said.

additional reporting by Jackie Lin