Sat, Jun 14, 2008 - Page 12 News List

Chang Hwa Bank reduces board seats

PUT TO THE TEST After five hours of heated debate, the bank's chairman called for a vote and the cut was finalized with the support of 53.14 percent of shareholders

By Joyce Huang  /  STAFF REPORTER

Despite opposition from the government and some shareholders, Chang Hwa Commercial Bank (彰化銀行) cut its board yesterday from 15 seats to nine.

The proposal, which passed at a shareholders meeting with 83 percent attendance, is widely viewed as a victory for Taishin Financial Holding Co (台新金控) as it would allow the state-controlled bank’s largest shareholder to accelerate its long-delayed merger activity.

After five hours of heated discussions, Chang Hwa Bank chairman Lee Yung-san (李庸三) called for a vote at around 2pm yesterday. The proposal was finalized with the support of 53.14 percent of shareholders. Taishin Financial, which has a 22.5 percent stake in Chang Hwa, occupies eight seats on the reduced board.

The board’s supervisors will also be cut from five seats to three.

After the meeting, Lee told reporters that “as slated, the bank’s board will be reshuffled in November.”

But before the vote, the proposal had drawn mounting opposition from bank employees, private shareholders and the Ministry of Finance — Chang Hwa’s second-largest shareholder, with a 20 percent stake.

CHB Industrial Union (彰銀產業工會) president Tsao Bing-kung (曹炳坤) yesterday criticized his top management for failing to reject the proposal.

“There should be checks and balances on the bank board’s powers. But with the proposal’s passage, it [Taishin Financial] can easily control the board,” Tsao said.

He said the union would fight for a seat on the board.

Chinese Nationalist Party (KMT) Legislator Chiu Yi (邱毅), who serves as a board member representing a private shareholder with a 3 percent stake, did not attempt to stall the proposal’s passage, after only 22 percent of shareholders supported shelving the proposal.

Chiu alleged that Financial Supervisory Commission (FSC) chairman-designate Gordon Chen (陳樹) had played a role in the Ministry of Finance’s approval of Taishin Financial Holding Co’s (台新金控) bid for a 22.5 percent stake in Chang Hwa in 2005.

Chen flatly rejected Chiu’s accusation that he had used his influence to benefit private banks. Chen, who was vice finance minister in 2005, said he had fulfilled his role as a deputy and that the auction had been open to all bidders.

“It was a decision finalized by the ministry, not me,” Chen said in a written statement released by the commission yesterday.

Chen also said he had quit on May 1 as independent board director at Taiwan Securities Co (台証證券), a Taishin Financial subsidiary, to avoid any conflict of interest following his appointment as FSC head on April 28.

Taishin Financial yesterday supported Chen’s statement and said it had earned the right to acquire Chang Hwa Bank shares in an open bid.

Shares of Taishin Financial closed 1.4 percent lower at NT$14.15, while Chang Hwa Bank shares rose 2.8 percent to NT$22 on the Taiwan Stock Exchange.

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