Despite market speculation that state-run Mega Financial Holding Co (兆豐金控) could again consider acquiring Taiwan Business Bank (台灣企銀), the financial regulator suggested the two sides may call it quits, a local newspaper reported yesterday.
Citing Financial Supervisory Commission Chairman Sean Chen (陳冲), the Chinese-language Apple Daily said the deal might fall apart because of opposition from labor unions on the two sides.
“Why can’t Taiwan Business Bank become independent? Why should Taiwan Business Bank take it for granted that it has to merge with Mega Financial?” Chen told the newspaper.
Mega Financial, the nation’s third-largest financial services provider in terms of assets as of Sept. 30, first announced in December 2005 its intention to acquire Taiwan Business Bank, which focuses more on the small and medium-sized enterprise sector, to increase its business scope.
The takeover bid was partially encouraged by the former Democratic Progressive Party (DPP) government’s industry consolidation policy that aimed to reduce the number of state-run banks to six.
After purchasing a 14 percent stake in Taiwan Business Bank within one year, Mega Financial, however, said in late 2006 that it might temporarily shelve the takeover bid of its smaller rival owing to strong opposition from their respective labor unions and also because of lawmakers’ concerns over possible corruption during the acquisition process.
In the following two years, Mega Financial did not increase its share in Taiwan Business Bank, following the then DPP government’s announcement that it would slow the pace of industry consolidation in response to rising public criticism about its push for rapid mergers and acquisitions in the sector.
The merger saga re-emerged in December after Mega Financial Chairman Wang Rong-jou (王榮周) told the Chinese-language Commercial Times that the company planned to again consider the acquisition of Taiwan Business Bank, a move which was welcomed by the Ministry of Finance and strongly protested by the labor unions again.