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Taishin Financial places merger on hold

Taishin Financial Holding Co (台新金控), which holds a 22.5 percent stake in Chang Hwa Commercial Bank (彰化銀行), said yesterday it had decided to put its planned share-swap deal with the bigger state-run lender on hold, delaying the merger between the two.

"The previously proposed 1:1.3 share swap ratio [one share of Chang Hwa for 1.3 shares of Taishin] is officially withdrawn," a Taishin Financial filing to the Taiwan Stock Exchange said.

On Dec. 28, Taishin Financial racheted up its proposed share-swap ratio from 1:1.2 to 1:1.3 in a bid to expedite its merger with Chang Hwa.

But Chang Hwa failed to propose a ratio of its own. The bank also canceled its board meeting on Friday after Chinese Nationalist Party (KMT) Legislator Chiu Yi (邱毅) showed up on behalf of Eric Chen (陳建志), one of two board members representing private-sector shareholders.

"Is it too much to ask that the ratio be increased to 1:1.5?"a top executive at Chang Hwa was quoted by the media as saying.

Perhaps as a result of political intervention, Taishin Financial's board took a hard line at a meeting yesterday. Company president Lin Keh-hsiao (林克孝) said the financial provider's foreign shareholders were confident that Taishin Financial's finances and share prices would take off in a year or two. By that time, he said, the company would be in a better position to negotiate the merger with Chang Hwa, which appeared reluctant to compromise on the share-swap ratio.

"The deal will have to be put on hold with no definite timetable for the completion of either the share swap or the merger. And we will have to start negotiations from scratch," Lin said.

Talks on the share-swap deal might not commence in the near future and Chang Hwa would remain a subsidiary bank under Taishin Financial, its second largest shareholder, Lin said.

He said Taishin Financial would focus on its own credit card, wealth management and securities brokerage businesses, which he said were the three pillars of the company's profits.

"Since the two sides could not reach a consensus [on the share-swap ratio], Taishin has decided to withdraw their proposal ... We, in principle, respect the decision," Vice Minister of Finance Liu Teng-cheng (劉燈城) said.

Additional reporting by Judy Lin
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