The workers' union of Chang Hwa Commercial Bank (彰化銀行) yesterday sued four government-appointed board members for breach of trust, claiming they failed to abide by conflict of interest rules in discussing a share-swap deal with Taishin Financial Holding Co (台新金控).
Taishin Financial holds a 22.5 percent stake in Chang Hwa and is its largest shareholder after it won a bid for 1.4 million preferred shares in 2005.
Last month, during a provisional board meeting, Chang Hwa's board passed a motion proposed by board members representing Taishin Financial to evaluate a share-swap merger with Taishin Financial, select a financial consultant to conduct the evaluation and detail guidelines for the financial consultant.
Union president Tsao Ping-kun (
Tsao made the statement yesterday, while leading more than 20 union members in a protest in front of the Ministry of Finance building. The group later delivered a petition to Su Ler-ming (
Tsao said the purpose of Chang Hwa's fundraising move two years ago was to improve its financial structure, not for it to be acquired by Taishin Financial.
In addition, the process has been rushed, he said, adding that the bank's needs and the consequences of the merger had not been evaluated.
Taishin Financial is scheduled to start reviewing financial consultants for the share swap evaluation today.
"We demand the selection be suspended immediately," Tsao said. "We also believe that board members representing the government failed to protect our interests."
Tsao said that the proposed merger would also have a negative impact on the interests of Chang Hwa shareholders, citing the financial disparity between the two.
Chang Hwa had NT$1.35 trillion (US$41 billion) in assets as of the end of last year, while Taishin Financial had only NT$976.16 billion of assets, he said, adding that Chang Hwa had posted a net income of NT$3.06 billion last year, compared with Taishin Financial's net loss of NT$12.06 billion.
Media reported that Taishin Financial proposed trading one Taishin share for one Chang Hwa share, even though Taishin's share price is lower than Chang Hwa's.
Su declined to comment on the companies' economic situations.
Taishin Financial shares closed up 1.21 percent at NT$16.7, and those of Chang Hwa closed up 2.07 percent at NT$19.75 yesterday.
In response, Su said the government would make a decision on whether to allow the merger after the evaluation is completed. If it is believed the merger would not be in Chang Hwa's interest, the government will not approve it, he said.
Taishin Financial spokesperson Carol Lai (賴昭吟) did not respond to the criticism, but said the selection of a consultant would continue.