Mega Financial Holding Co (兆豐金控) yesterday said that it intends to sell its stake in Taiwan Business Bank (TBB, 臺灣企銀) as planned by June next year, going counter to the government’s hope to push for consolidation among state-run financial firms.
“Mega Financial will stick to its plan to sell its 13.4 percent stake in Taiwan Business Bank,” executive vice president Grace Lin (林瑞雲) said by telephone. “The process needs to be completed before the election of a new board directors in June 2012.”
The statement came after the Ministry of Finance last month voiced support for mergers between state-run financial firms, fueling speculation Mega Financial might reconsider its share release plan.
A reversal would have to win approval from a shareholders’ meeting, Lin said, adding she could not see any possibility of such a move on the horizon.
“The share release plan will take effect once the Ministry of Finance, the biggest shareholder, gives the go-ahead on how,” Lin said.
The government owns a 23 percent stake in Mega Financial, which bought about 540,000 TBB shares at NT$11.23 each in 2006 with the intention of merging the companies.
However, that plan has been mired because of the unfavorable macroeconomic environment.
Mega Financial is mulling selling its stake on the local bourse to a strategic partner or via an issuance of euro-convertible bonds, Lin said.
The share release should yield a profit because TBB’s stock price has recovered above the cost level, Lin said.
TBB closed up 1.24 percent to NT$12.25 yesterday, while Mega Financial picked up 1.83 percent to NT$22.3, outperforming the main index’s 0.88 percent gain.
Bilateral unions have opposed a merger and the government hasn’t offered any concrete support, Lin said.
TBB chairman Peter Lo (羅澤成) recently told the Economic Daily News that a merger is no longer a concern after the lender emerged from its financial woes and aims to boost earnings by 35 percent this year.
Mega Financial, like other domestic peers, is seeking cooperation with Chinese financial firms to help expansion across the Taiwan Strait, Lin said.
The firm’s banking arm, Mega International Commercial Bank (兆豐國際商銀), plans to open a branch in Suzhou, China, this quarter after the Financial Supervisory Commission approved the expansion last month.
Mega Financial posted a net income of NT$15.54 billion (US$529.68 million) last year, or NT$1.40 earnings per share, making it the most profitable among its state-run peers. The figures marked an 8.39 percent improvement from 2009, which Lin attributed to rising income from interest and fees at the banking subsidiary.
Mega Financial expects profitability to increase about 10 percent this year as core businesses recover further, Lin said.