China Development Financial Holding Corp (中華開發金控) will pay as much as NT$11 billion (US$318 million) to raise its stake in Grand Cathay Securities Corp (大華證券) to 62 percent from 17 percent, becoming its controlling shareholder.
China Development, Taiwan's third-largest financial-holding company, will pay the former ruling Nationalist Party as much as NT$21 a share, about a fifth more than market price, for 530 million Grand Cathay shares, company spokeswoman Grace Fang (方鳳山) said.
A new law allowing banks, brokers and insurers to combine under holding companies is prompting mergers across the financial industry, where many companies are struggling in the aftermath of last year's recession, the worst on record.
"Consolidation in the banking and securities industries in Taiwan is going to speed up as the holding company law means only large, strong players can survive," said Liu Juming, who helps manage NT$15 billion (US$428 million) at Asia Pacific Securities Investment Trust Co (金亞太投信), which holds the stock.
China Development Financial Holding was formed in December when China Development Industrial Bank (中華開發銀行) reorganized into a holding company structure. In a written statement issued then, the company said its "first goal is to become one of the top 300 banking giants in the world."
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