The Ministry of Finance yesterday denied a report that state-run Taiwan Cooperative Bank (合作金庫銀行) might be taken over by Cathay Financial Holding Co (國泰金控).
The ministry holds a greater than 40 percent stockholding in Taiwan Cooperative, which commands a significant market share of about 10 percent in both lending and savings markets.
"Any merger deal or share sale in state banks must be approved by the legislature first. The government presently has no such policy considerations," Deputy Minister of Finance Liu Teng-cheng (劉燈城) told reporters yesterday.
The share sale plans of state banks must be carried out in an open and transparent way, he said.
Despite the ministerial denial, shares of Taiwan Cooperative shot up by close to the 7 percent daily limit to close at NT$27.45 on the Taiwan Stock Exchange, while Cathay Financial shares were down by 1.52 percent to NT$90.6.
While the rumor captured the attention of investors, both lenders yesterday rebutted the reports and said no merger plan was under way.
"This is purely a rumor," Cathay Financial chief strategy officer Lee Chang-ken (
"Our holding in Taiwan Cooperative by the insurance unit is a financial investment only," he said.
Through Cathay Life Insurance Co (
Stepping up the holding in future would depend on the investment team's professional judgment, Lee said.
The executive remained tight-lipped, however, about the company's acquisition strategy and declined to comment if it intended to bid for The Chinese Bank (
Cathay United Bank (
Taiwan Cooperative president Chen An-hsiung (陳安雄) also denied the rumor.
"Cathay Financial invested in Taiwan Cooperative because the bank is capable of delivering a nice investment return in both share price and dividend policy," Chen said by telephone.
Meanwhile, Taiwan Cooperative said there was a very good chance that it would take over the debt-ridden Great Chinese Bill Finance Corp (力華票券), a firm that is now under the management of the bank and other rivals including Cathay United, after the parent Rebar Group collapsed in January.
Downplaying the potential impact on profitability, Chen said the bank should be able to receive compensation in cash for the takeover.
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