CTB halts talks with Central Insurance Co

CTB Financial Holding Co (交銀金控) halted takeover talks with Central Insurance Co (中央產險) and two other companies, threatening efforts by the owner of Taiwan's Chiao Tung Bank (交通銀行) to build a securities and insurance business.

State-controlled CTB halted talks with Central Insurance, Concord International Securities Co (致和證券) and Sunrise Securities Co (日陞證券), CTB Executive Vice President Huang Feng-I (黃豐一) said. The company had announced its acquisition plans in February.

"The negotiations are pending indefinitely for now because we couldn't agree on the conditions," said Huang.

Taiwan's banks, brokers and insurers are merging in the wake of last year's recession, the worst on record. CTB, which wants to compete with Cathay Financial Holding Co (國泰金控) and Fubon Financial Holding Co (富邦金控), the nation's two biggest financial firms, is still in talks to buy Barits Securities Corp (倍利證券), Chung Hsing Bills Finance Co (中興票券), Chung Kuo Insurance Co (中國人壽) and fellow state-backed lender International Commercial Bank of China (中國商銀).

Some investors say the breakdown in talks is bad news for those who have earlier bought into shares on hopes of benefits from the takeovers and the combining of businesses.

"The forecast benefits -- which have been factored into the share prices -- will fall short," said Julian Chen (陳俊穎), who helps manage about NT$1 billion ($29 million) in Taiwan equities at National Investment Trust Co (建弘投信). "The industry's consolidation should be fast, so the breakdown in talks is a setback." Central Insurance Executive Vice President Charles Sung confirmed the cessation of talks with CTB. The insurer, worth NT$3.28 billion (US$96 million), has been in talks to join other financial holding companies as well, he said.

"Any chance of new talks may have to wait until our half- year report is out as conditions have changed while the market has improved," said Concord International Vice President Chen Hsi-chun. Privately held Concord International, based in Taiwan's southern city of Tainan, has nine branches island-wide.

Hu Pi-shan, a manager at privately held Sunrise Securities, which operates three branches out of Tainan, said talks have stalled because of legal technical issues.