Chang Hwa Commercial Bank (CHB, 彰化銀行) yesterday approved board seat arrangements in a fashion that averted a showdown between its two largest shareholders.
The bank is to call an extraordinary general meeting on Dec. 8 to elect new board directors — a constant battle between Taishin Financial Holding Co (台新金控) and the Ministry of Finance to juggle control of the formerly state-run lender.
The new CHB board will have six directors and three independent directors, from the current seven directors and two independent directors, the bank said.
Taishin Financial, the bank’s largest shareholder with a 22.5 percent stake, earlier proposed increasing the number of independent directors to four, allowing it to share the seats evenly with the ministry, while retaining a majority of director seats.
The finance ministry, the second-largest shareholder in CHB with a 20 percent stake, insisted on installing three independent directors, with a view to securing two seats so it could stop major CHB decisions.
“We will not accept boardroom rearrangements that deprive the ministry of checks and balances,” Minister of Finance Chang Sheng-ford (張盛和) said on Monday.
The Financial Supervisory Commission earlier threatened to intervene if Taishin Financial persisted in pushing through the proposals despite the Ministry of Finance’s protests.
Last year, the commission thwarted Taishin Financial’s requests to acquire the local unit of New York Life Insurance Co on concerns over capital adequacy.
The ministry yesterday expressed satisfaction about the result of the meeting.
“We are happy to see a consensus on seat arrangements of Chang Hwa Bank’s audit committee reached by the two sides,” National Treasury Administration Director-General Joanne Ling (凌忠嫄) told a press conference.
Asked if the ministry agrees with Taishin International’s suggestion that state-run banks, such as Mega International Commercial Bank (兆豐國際商銀) or First Commercial Bank (第一銀行), could take over its Chang Hwa Bank shares, Ling said the ministry would respect the two lenders’ decision.
As for a suggestion that Chang Hwa Bank buys back its own shares, Ling said the bank needs to consider if it would be in its shareholders’ interest.
The ministry is still targeting safeguarding more than half of the seats on the Chang Hwa Bank board at the extraordinary meeting on Dec. 8.
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