The Bank of Kaohsiung (高雄銀行) said its main shareholder, the Kaohsiung city government, would sell a 23 percent stake in the commercial lender, which also acts as the municipal treasury for the southern Taiwan city.
The port city plans to sell 100 million Bank of Kaohsiung shares through auction or private placement, bank spokeswoman Hsu Tsui-mei said. That values the stock offering at NT$1.4 billion (US$40 million), based on the stock's closing share price of NT$14 a share yesterday.
"The stake sale plan is part of the city's bid to remove government influence [from the bank] and to give it full autonomy," Hsu said.
Kaohsiung City owns a 48.9 percent controlling stake in the municipal bank and its representatives on the board serve in key management posts such as chairman. The sale plan comes as Taiwan's government, which wants to minimize political influence in business, pushes banks to act on a more commercial basis.
Taiwan is pushing banks to combine into fewer and stronger institutions as part of an industry clean-up, which this month saw it seize control of 36 troubled credit cooperatives. In June, parliament passed legislation allowing the creation of holding companies that can acquire lenders, securities companies, insurers and money managers.
First Commercial Bank (第一銀行) said in January it may take over southern rivals like Bank of Kaohsiung in response to the government call for industry consolidation and to balance its business geographically.
First Commercial Bank Chairman Jerome Chen (陳建隆) served as Bank of Kaohsiung chairman until the Ministry of Finance last October hired him to run First Commercial. His hiring was part of a management reshuffle at state-controlled Taiwanese companies as President Chen Shui-bian (陳水扁) sought to make good on policy pledges, including bank reform, made during his campaign.
President Chen's Democratic Progressive Party swept to power 15 months ago, unseating the Nationalist Party that was criticized for alleged corruption and slack governance. Many analysts say the Nationalists were too closely allied to the financial sector to be able to reform it during their 50 years in power.
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