The Financial Supervisory Commission (FSC) yesterday expressed concerns about the way China Strategic Holdings Ltd (中策集團), in consortium with Primus Financial Holdings Ltd, handled the planned acquisition of Nan Shan Life Insurance Co (南山人壽).
FSC Chairman Sean Chen (陳冲) cited inconsistencies and regulatory complications in China Strategic Holdings’ commitments to the local market.
“Be it Primus Financial or Chinatrust Financial Holding Co [中信金控], it is important [for us] to look into the consistency of their commitments” to the Taipei life insurer, Chen said without elaborating.
Nan Shan Life Insurance is a to-be-liquidated unit of financially troubled American International Group Inc (AIG).
Chen made the comment a day after Chinatrust Financial, in an unexpected twist, said it would take up a 30 percent stake in Nan Shan from its rival-turned-partner China Strategic — a deal that will become effective only after the Hong Kong-based consortium completes its ownership transfer of the Taipei life insurer.
Citing Article 43-6 of the Securities and Exchange Act (證券交易法), Chen said China Strategic would be required to undergo another regulatory review as it plans to release shares in Nan Shan to Chinatrust Financial and later take up a 9.95 percent stake in the local financial services provider.
Chinatrust Financial president Daniel Wu (吳一揆) yesterday said the partnership with China Strategic would fully comply with regulations.
“There will be no deal if China Strategic [and] Primus Financial fail to secure regulatory approval ... to either complete the transfer of Nan Shan’s ownership, to release part of [China Strategic’s] stake in Nan Shan to Chinatrust Financial or to take up a stake later in Chinatrust Financial,” Wu told the Taipei Times by telephone.
The planned partnership between Chinatrust Financial and China Strategic was reached five days after the Ministry of Economic Affairs investment commission issued an initial rejection of the Hong Kong consortium’s application to raise funds before completing the Nanshan deal. The commission said the consortium had failed to fully identify its stakeholders.
The consortium has not soothed regulatory concerns about its stakeholders as several of its major shareholders may be China-born although having citizenship from countries other than China.
Wu shrugged off the question of whether Chinatrust Financial would appoint a new president to Nan Shan if its 30 percent stake empowers it to do so — although contrary to Primus’ earlier pledge to retain Nan Shan’s employees and top management for two years.
“We may or may not exercise that right” if given the option to replace president Frank Chan (陳潤霖), Wu said.
The life insurer’s labor union, however, would be happy to see Chan leave.
During its negotiations with the management, the labor union has lost trust in Chan, said Jonathan Chang (張政文), a spokesman for the union.
Chang called on Chinatrust Financial to address the matter of repaying pensions for Nan Shan’s 36,000 sales agents.
RSS