Mega Financial Holding Co (兆豐金控) will not sell its stake in Taiwan Business Bank (TBB, 臺灣企銀) to any Chinese bank, Vice Minister of Finance William Tseng (曾銘宗) said yesterday.
Tseng’s clarification came in reaction to a report by the Chinese-language Commercial Times, which said that Mega Financial is considering the possibility of selling its 12.01 percent stake in Taiwan Business Bank to a Chinese bank following the recent signing of the cross-strait service trade agreement.
TBB is a state-owned bank that focuses on small and medium-sized businesses.
If the offer goes through, Mega Financial would be able to receive much-needed cash to solidify its capital and liquidity bases, and therefore prepare for equity investment in Chinese banks, the newspaper said.
However, the Ministry of Finance does not agree.
“We do not hope to create a second-largest shareholder of Taiwan Business Bank,” Tseng, who is also the chairman of Taiwan Financial Holding Co (台灣金控), told reporters on the sidelines of a press conference held by the nation’s largest state-owned financial services provider.
The ministry is not willing to see a repetition of the case where Chang Hwa Commercial Bank (彰化銀行) is being managed by privately run Taishin Financial Holding Co (台新金控), Tseng said.
In 2005, Taishin Financial acquired a 22.5 percent stake in Chang Hwa Bank, which resulted in the recent turmoil over a possible merger between Taishin International Bank (台新銀行) and Chang Hwa Bank.
Last month, Chang Hwa Bank’s board of executive directors — which have been mainly influenced by Taishin Financial — approved plans to merge Chang Hwa with its banking arm.
Tseng reiterated that Taishin Financial’s hostile takeover bid would not work out, with the ministry remaining firm in its opposition to the deal.
Meanwhile, an analyst at Primasia Securities Co also does not believe that Mega Financial’s plan can be realized.
“We have serious doubts over the attractiveness of TBB to Chinese banks because our data show that TBB’s profitability has not been very sound,” Primasia analyst Michael Lee said in a note yesterday.
He added that some of the lender’s profitability ratios, such as pre-tax return-on-equity and return-on-assets, have since 2010 even fallen below the first quartile among the 39 local banks.
In addition, TBB’s capital adequacy and liquidity are also below the industry average among its local peers, which will likely to affect the bank’s loan growth, Lee said.
“Even though the newspaper article suggests that Bank of Beijing would like to acquire a 10 percent stake from Mega, we are still skeptical about the rationale for this deal,” he said.
Additional reporting by Kevin CheN