Taishin Financial Holding Co (台新金控) yesterday retained majority control on the board of Chang Hwa Commercial Bank (CHB, 彰化銀行), in line with a consensus it reportedly struck with the Ministry of Finance, the second-largest shareholder, a day earlier.
Taishin Financial, the lender’s largest shareholder with control of a 22.5 percent stake, won five seats on the nine-member board at a shareholders’ meeting held to elect new board directors as the three-year tenure of incumbents is due to expire, Chang Hwa Bank said in a filing to the Taiwan Stock Exchange.
The election results seemed in line with a report by the Chinese-language Economic Daily News, which said that Taishin Financial chairman Thomas Wu (吳東亮) visited Minister of Finance Lee Sush-der (李述德) on Thursday and the two agreed to maintain the status quo: Taishin Financial controlling five board seats and the ministry the remaining four.
Neither Lee nor Taishin Financial could be reached for comment on the report as of press time yesterday.
According to the newspaper report, the arrangement allows Taishin Financial to pick CHB’s chairperson and the finance ministry to appoint CHB’s president.
Chang Hwa Bank is expected to call a board meeting in the near future to fill the top executive positions.
Incumbent chairman Julius Chen (陳淮舟) is widely expected to stay at the helm, given that the bank’s total assets increased by more than NT$300 billion (US$9.87 billion) under his leadership, Chen told shareholders.
Chang Hwa Bank is the only state-run lender with a loan loss reserve above the 1 percent threshold, which is scheduled to take effect next year on the advice of the Financial Supervisory Commission rather than as a statutory requirement, Chen said.
The lender’s bad loan ratio stood at 0.4 percent as of last month, while its coverage ratio is at 298 percent, according to Chen.
Fitch Ratings yesterday affirmed CHB’s long-term rating at “BBB+” with a stable outlook.
This reflects CHB’s stable credit profile over the past 12 months, Fitch said.
The bank’s ratings are also based on the high probability of government support, the ratings agency said.
CHB’s profitability has recovered strongly from the trough of 2009 as net interest margins widened and loan impairment charges declined amid the economic recovery of the past two years, Fitch said.
The lender’s asset quality has improved substantially in the past decade, Fitch added.
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