The government would look favorably on the proposed merger of Taishin International Bank (台新銀行) and Chang Hwa Commercial Bank (彰化銀行) if it meets the rules governing financial soundness, synergy benefits and free-market operations, the Chinese National Association of Industry and Commerce (CNAIC, 工商協進會) said yesterday.
CNAIC chairman Kenneth Lo (駱錦明) made the statements after a closed-door breakfast meeting between association members, Premier Jiang Yi-huah (江宜樺) and Cabinet ministers.
“This is a significant change on the part of government, from an outright rejection to a willingness to give [the merger] favorable consideration,” Lo told reporters after the meeting.
Lo, who is also chairman of Industrial Bank of Taiwan (IBT, 台灣工銀), and other CNAIC members brought up the issue during the meeting, at which Minister of Finance Chang Sheng-ford (張盛和) and Financial Supervisory Commission Chairman Chen Yuh-chang (陳裕璋) were present.
Lo said Chen promised to conduct a review of the merger plan in an open and fair manner to see if it meets the rules governing corporate financial health and governance, as well as the advancement of synergy benefits.
After the review, the commission would forward the case to the Ministry of Finance, which on Feb. 20 rejected a surprise attempt by Taishin Bank to merge with Chang Hwa Bank.
Taishin Bank, the main subsidiary of Taishin Financial Holding Co (台新金控), is the largest shareholder in Chang Hwa Bank with a 22.5 percent stake, while the finance ministry has a 20 percent stake.
Should the commission give its go-ahead, the finance ministry would give the merger positive consideration, Lo said, adding that the government’s failure to set clear criteria on mergers had thwarted the local financial sector’s attempt to internationalize.
The local banking sector is in need of consolidation and the government should not block that because of the flaws of past attempts at consolidation, Lo said.
The CNAIC plans to organize a forum later this month, to which it would invite academics and banking executives to brainstorm recommendations on the issue of consolidation, Lo said.
However, the Ministry of Finance said in a statement yesterday evening that it had not changed its stance on the merger, as local media had earlier reported.
Chang said the ministry had only promised to give the management rights to bidders in the Chang Hwa Bank equity offerings in 2005, with a merger not mentioned.
The ministry would carefully consider every issue related to Chang Hwa Bank to protect the public’s interests, and those of the bank’s shareholders, employees and clients, the statement said.
Only a company with high-quality management and a sound financial structure would be a qualified candidate to merge with the bank, with synergies the other criteria, the ministry added.
Additional reporting by Amy Su