Prospective buyers staging hostile takeovers in the financial sector would face additional checks on their business performances, financial conditions and overseas expansion capabilities, as well as their records in corporate social responsibility initiatives, the Financial Supervisory Commission said yesterday.
The decision came after the commission laid out its requirements for merger-and-acquisition (M&A) deals in the sector.
The commission said it plans to finalize its policy on promoting consolidation in the industry by October and to begin accepting applications in November.
Six financial holding companies and seven banks meet the commission’s requirements to launch hostile takeovers, the commission said.
However, consolidation involving government-run financial companies is off the table, it said, adding that the policy would only be applicable to mergers and acquisitions between private-sector security brokerages, banks, insurers and financial holding companies.
The commission would continue collecting industry opinions, Banking Bureau Deputy Director-General Sherri Chuang (莊琇媛) told a news conference in Taipei following a closed-door meeting with company representatives and other regulatory authorities.
During the meeting, company representatives expressed different opinions on the requirements, Chuang said, adding that the commission would finalize its decision within two months.
Some have called the requirement that prospective buyers’ returns on equity and assets must have maintained a 66th percentile rank in their industry within the past three years too strict, suggesting that only one of the metrics be used, Chuang said.
Others have said that instead of measuring a company’s ability to expand abroad by counting the number of its offshore branches, the commission should favor companies that derive larger portions of their total earnings from abroad, Chuang added.
The commission would look into finalizing the terms and whether a buyer would need to purchase more than half of a target company to complete a consolidation deal, while preventing market upheavals during heated hostile takeovers, she said.
Chuang urged prospective buyers to refrain from buying stocks in their acquisition target before the commission starts accepting applications.
“Financial holding companies must have the funds ready to purchase an initial 10 percent stake in their acquisition targets upon submitting their applications,” Chuang said. “Each application will be assessed on a case-by-case basis,” especially those from companies that fall short of the requirements, or have ongoing labor disputes or unresolved consolidation deals.
Commission Chairman Wellington Koo (顧立雄) earlier said that the commission aims to facilitate consolidation deals in the industry, and unlike past reforms, the deregulation plan has no deadlines or limits on applications.
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