FSC stands firm on Mega Financial investment ban

MEETING REQUIREMENTS::The commission said it was unaware of any of the company’s new investment plans and would handle any application it receives fairly

By Crystal Hsu  /  Staff reporter

Sat, Mar 16, 2013 - Page 13

The Financial Supervisory Commission (FSC) yesterday said it respected Mega Financial Holding Co’s (兆豐金控) decision to seek an administrative remedy to a six-month investment ban, but that it had not received any investment applications from the state-run company.

The commission made the clarifications in response to media reports that Mega Financial would turn to the FSC after its plans to expand overseas were hit by corrective action applied by the commission in October last year.

“The FSC does not discriminate against any financial institution, state-run or private, which may seek an administrative remedy to any corrective decisions,” the commission said.

The commission suspended Mega Financial from applying for new investment applications after it failed to meet a deadline to sell a 13.44 percent stake in Taiwan Business Bank (台灣企銀), another state-run lender.

In 2005, Mega Financial sought to acquire the smaller peer under the second wave of financial reforms pushed by the then-Democratic Progressive Party administration, but it dropped the plan after the reforms were halted amid allegations of impropriety.

“Financial institutions should dispose of holdings in other financial institutions within the set deadlines if they are no longer interested in buying them,” the commission said.

In April 2010, Mega Financial officially pulled out of the deal and was told to sell the stake in Taiwan Business Bank by June 30 last year.

DILEMMA

In 2011, Mega Financial issued more than 500 million bonds that allowed subscribers to trade them for Taiwan Business Bank shares at NT$13 per share, a scheme to end the dilemma that failed because the price of Taiwan Business Bank shares fell below the offer price.

“If we sell the stake in Taiwan Business Bank on the open market, the share price would fall further and Mega Financial would incur losses,” a Mega Financial official said by telephone on condition of anonymity.

The bond scheme, due to expire in January next year, could still emerge as the best solution and the bonds could be converted into shares later this year, as an improving economy is positively affecting Taiwan Business Bank shares, the official said.

Taiwan Business Bank shares closed down 0.32 percent at NT$9.47 yesterday, Taiwan Stock Exchange data showed.

EXPANSION

Mega International Commercial Bank (兆豐國際商銀), the banking arm of Mega Financial, plans to open new branches in Vietnam, Cambodia and Thailand, a bank official said.

“Hopefully, the commission will give its go-ahead after the six-month ban expires next month,” the official said.

However, Financial Supervisory Commission Secretary-General Lin Tung-liang (林棟樑) said the ban would remain in place until Mega Financial sells the stake.

The regulator said it was unaware of Mega Financial’s investment plans and would handle any application it receives fairly.