Minister of Finance Lee Sush-der (李述德) said on Wednesday that the Ministry of Finance (MOF) might allow more state-run banks to sell minority stakes to foreign and private investors as a way to help enhance their competitiveness.
“Foreign investors will help state-run banks expand overseas channels, further increasing their profitability and competitiveness,” Lee told a media briefing.
He also encouraged state-owned financial holding companies to make strategic alliances with foreign investors.
Lee took the joint ventures between the state-owned Taiwan Cooperative Bank (TCB, 合作金庫銀行) and the French banking group BNP Paribas as an example.
He said the BNP Paribas Assurance TCB Life Insurance Co (合作金庫人壽) and the BNP Paribas TCB Asset Management Co (合庫巴黎證券投信) have proved beneficial for both sides.
Taiwan Cooperative chairman Liu Teng-cheng (劉燈城) said in June that BNP Paribas had expressed interest in acquiring shares in the company once the state bank expands into a financial holding company by the end of the year.
Lee also named state-run Mega Financial Holding Co (兆豐金控) as a good investment target for foreign investors, after the ministry found foreign investors had bought some of Mega Financial’s shares from Chinatrust Financial Holding Co (中信金控).
Horizon Securities Co (宏遠證券) analyst Benson Huang (黃重善) said government-controlled financial firms have long been coveted by foreign investors because they are very sensitive to any adjustments in government policies.
“In particular, amid warming cross-strait business ties, any financial policy liberalization is expected to directly lend support to these government-invested firms and indirectly help their foreign shareholders,” Huang said.
In addition, these government-controlled financial firms have relatively large assets, in particular, property assets that have risen in value on the back of a booming local property market, he said.
Huang said he expected Mega Financial to become a favorite of foreign investors because the company has a solid record in the foreign exchange business and strong profitability.
As of Wednesday, foreign investors held more than 25 percent of Mega Financial’s outstanding shares, the highest proportion among state-owned financial firms.
Huang said state-owned First Financial Holding Co (第一金控) has a good chance to recruit a large single foreign shareholder because the company will make a NT$16.4 billion (US$566.7 million) rights issue to boost its capital for future expansion.
The ministry has approved First Financial’s and Taiwan Business Bank’s (台灣企銀) capital increase plans through the issue of new shares, Lee said on Wednesday. Taiwan Cooperative also plans to increase its capital after it expands into a financial holding company, he said.
In Taipei trading, the financial sector rose 0.34 percent, against the TAIEX’s decline of 1.65 percent. Among the financial institutions in which the government has a controlling stake, Mega Financial gained 1.81 percent to NT$28.2, Taiwan Cooperative rose 1.27 percent to NT$24, Chang Hwa Commercial Bank (彰化銀行) added 1.94 percent to NT$23.65 and First Financial climbed 1.01 percent to NT$25.