Chang Hwa Commercial Bank’s (彰化銀行) executive directors yesterday approved plans to merge with Taishin International Bank (台新銀行), despite protests by government representatives, as Taishin Financial Holding Co (台新金控) made another move to acquire the state-run lender.
Taishin Financial and the Ministry of Finance control 22.5 and 20 percent respectively of Chang Hwa Bank’s shares. The directors passed the merger proposal in a 2:1 vote and plan to call a board meeting later to confirm the matter.
The action came one week after Taishin Financial shareholders authorized company chairman Thomas Wu (吳東亮) to take legal steps, if necessary, to push for the merger of the two banks.
Taishin Financial has majority control of Chang Hwa Bank’s boardroom and executive directors’ seats.
The finance ministry issued a statement later in the day condemning the vote, calling it both illegal and inappropriate. It also criticized Taishin Financial’s move to approve a feasibility study on the merger.
“It is improper for executive directors to discuss merger proposals as they have significant bearing on the company’s share price and the overall financial market,” the ministry said in a statement.
Feasibility studies on mergers involve the vital interests of a company and should be initiated by the management team, not by executive board directors, it added.
Government representatives on the board will continue to voice their opposition to the merger and the feasibility study after the report is sent to the board for further discussion, the ministry said.
The ministry said it has also sent official notices to the Financial Supervisory Commission, Taiwan Stock Exchange Corp and Securities and Futures Investors Protection Center asking them to monitor Taishin Financial to see if it uses the study to influence its stock price.
Taishin Financial shares closed up 1.54 percent at NT$13.20 yesterday, underperforming the TAIEX, which rose 2.26 percent.