The shares of CTBC Financial Holding Co (中信金控) picked up 1.55 percent to NT$19.7 yesterday, outpacing the TAIEX’s 0.56 percent gain on reports it would buy a Japanese lender at an ultra-low price and post a large profit from selling its headquarters building.
The nation’s third-largest financial service provider declined to comment on merger and acquisition speculations that it could buy Tokyo Star Bank for ￥52 billion, allowing CTBC to recognize a bargain benefit valued at NT$14.4 billion (US$485.57 million).
“We cannot, and will not, make comments on market rumors,” CTBC Financial said in a stock exchange filing.
The increase in CTBC Financial shares also outperformed the sector’s 0.75 percent advance, Taiwan Stock Exchange data said.
As of yesterday, CTBC’s shares had strengthened 5.63 percent so far this month, and 14.87 percent since the beginning of this year, compared with increases of 5.24 percent and 6.9 percent on the TAIEX during the same periods.
The bank-focused conglomerate has reportedly agreed to buy a controlling stake in the Japanese lender from its shareholders, namely Lone Star Funds, Shinsei Bank Ltd and Credit Agricole SA, according to local media.
While tight-lipped, CTBC Financial earlier voiced keen interest in tapping Japan’s banking market, which offers potential for selling pension and wealth management products, given its fast-aging population and high savings.
The buyout would be the first takeover of a Japanese bank by a foreign financial peer and it would grant CTBC Financial a foothold in the retail banking business in the world’s third-largest economy.
Its main subsidiary, CTBC Bank (中信銀行), has inked three cooperation pacts this year with three local Japanese counterparts to help Japanese customers expand in China and southeast Asia.
Separately, CTBC Financial made known the conditions for the sale of its office building in Taipei’s prime Xinyi District (信義).
The conglomerate intends to retain 5 percent of the building for its banking unit and may purchase 20 percent of the floor space from the buyer after it tears down and reconstructs the building, CTBC Financial president Daniel Wu (吳一揆) said.
CTBC Financial would like to enjoy the priority right to negotiate the purchase of the remaining 75 percent of the new building, Wu said.
The group wants to maintain the right to halt the deal and be spared from compensation claims, if it sees fit, or if the government intervenes.
Cultural authorities have pressed for preservation of Novel Hall, the adjoining theater house that CTBC Bank owns and aims to dispose together with the office building.
The auction terms have raised questions from the regulator on how CTBC Financial intends to book profits given the repurchase arrangements.
The Financial Supervisory Commission is also demanding more details as CTBC Financial moves to sell its property in November.