Land Bank of Taiwan’s (土地銀行) initial public offering (IPO) will bring in strategic alliance partners to help the state-owned bank expand and compete with rivals, Minister of Finance Lee Sush-der (李述德) said.
The ministry is considering strategic partners with advanced management know-how and financial expertise, but will not give up management control of the bank.
“The government will retain its controlling stake in the bank,” Lee told the Taipei Times by telephone on Friday.
The ministry’s decision to launch an IPO of the state bank came after the Cabinet last week approved a special spending program of NT$100 billion (US$3.03 billion) over the next three years to help rebuild areas hit by Typhoon Morakot.
Morakot devastated the southern part of Taiwan two weeks ago, causing NT$14.43 billion in agricultural losses, substantial damage to infrastructure and the tourism sector in the area, as well as hundreds of deaths.
The ministry plans to sell a 40 percent stake in the lender — the nation’s fourth-biggest by asset value and one that possesses huge real estate properties — to help finance typhoon-related reconstruction work, Lee said.
The ministry intends to raise NT$40 billion from selling bank stocks, which are valued at NT$40 per share, while the remaining NT$60 billion will come from loans, he said.
The 63-year-old lender, 100 percent owned by the government, had a net value of NT$103.4 billion in the first quarter of the year. It has 142 domestic branches, an offshore banking unit and five branches and offices overseas, with 5,800 employees on its payroll.
The ministry is also considering selling shares to the bank’s employees and the general public, but Lee said the government did not intend to privatize the bank through the proposed IPO.
The bank’s union had voiced strong objection to the planned IPO, arguing in a statement on Thursday that it made more sense for the ministry to borrow the entire reconstruction fund from government-run banks free of interest.
The union said the land bank contributes NT$8 billion a year to state coffers and the government should hold onto its stake, denying business groups or Chinese capital the opportunity to take the lender.
Lee said the ministry would press ahead with the share sale, which will not affect the rights or benefits of the bank’s workers in any fashion.
“The ministry will talk to them and seek their understanding,” he said.
As the government also aims to sell a 10-percent stake in Taiwan Financial Holding Co (台灣金控) sometime next year, a share sale in Land Bank of Taiwan will leave the Export-Import Bank of the Republic of China (中國輸出入銀行) as the sole fully government-owned lender.