Tue, May 09, 2017 - Page 12 News List

Taishin Financial says court to rule in its favor

By Crystal Hsu  /  Staff reporter

Taishin Financial Holding Co (台新金控) yesterday said it was confident that it would regain management rights at state-run Chang Hwa Commercial Bank (CHB, 彰化銀行), saying a court would rule in its favor next week as all the evidence lends support to its claim.

The High Court is scheduled to hand down a ruling on Wednesday next week on whether the Ministry of Finance remains legally obligated to help Taishin Financial win majority control of CHB as stated in a 2005 agreement.

“The ministry must not engage in any move that would violate the principle of trust, but should yield management rights over CHB to Taishin Financial,” Taishin Financial chief financial officer and spokesman Welch Lin (林維俊) said on the sidelines of an investors’ conference.

The verdict comes before CHB board elections are due to be held on June 16, when the three-year terms of six directors and three independent directors are to expire.

A district court in April last year ruled in favor of Taishin Financial and asked the ministry not to obstruct its efforts to gain majority control. However, the court rejected the company’s plea for NT$16.5 billion (US$546.97 million) in damages, saying the ministry was not responsible for the company’s failure in the 2014 board elections when CHB workers’ unions and shareholders rallied behind the ministry.

The two sides reached an agreement in 2005 after Taishin Financial took a 22.5 percent stake in CHB amid a government-led drive for consolidation in the financial services industry.

The ministry has said that it would not stand in Taishin Financial’s way, but would protect state interests and respect the wishes of CHB shareholders if they vote for government-backed candidates again.

Lin said he was confident the court would deliver justice in an unequivocal fashion this time after the company limited the suit to the validity of the contract and dropped the claim for damages.

Taishin Financial posted net income of NT$3.33 billion in the first quarter, a decline of 13.2 percent year-on-year, as its investment in CHB lost value and trading operations slowed.

Fund sales picked up in the first quarter, while sales of insurance policies at its banking arm weakened, Lin said.

Net interest margin, a critical profitability gauge for financial institutions, slipped to 1.36 percent last quarter from 1.41 percent three months earlier, the spokesman said, attributing the retreat to flagging demand for yuan-denominated loans.

The conglomerate aims to boost its corporate lending this year, especially by increasing loans to small and medium-sized enterprises, Taishin Financial president Joseph Jao (饒世湛) said.

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