China Development Industrial Bank (
A front-page news report in a local financial daily yesterday said the government may attempt to takeover China Development in its campaign to "democratize" dozens of financial institutions. The report said the government may try to oust Liu, a close advisor and confidante of former President Lee Teng-hui (
"We reassert that the bank is a private development bank that has more than 500,000 shareholders, and isn't owned by any single political party," the bank said in a statement. "It is not a party business nor a state business, thus its operations are completely dependent on professional managers and unrelated to politics."
But news of the possible shake up sent the shares of China Development rising yesterday. The bank's stock rose NT$2.4 to NT$37, the 7 percent daily limit.
Management struggle is often considered as good news in the stock market, as the contestants usually try to prop up the stock to win support from shareholders.
China Development, one of Asia's largest technology investment banks and venture capital funds, is often seen as closely related to the KMT -- although the former ruling party has divested its stake in the bank.
The report yesterday speculated that the DPP may install current president Benny Hu (
But Liu hit back yesterday during the bank's board of directors meeting, saying that the DPP Secretary-general Wu Nai-jen (
According to local media, Wu is reportedly masterminding the campaign to topple Liu -- known for his blunta and frequent comments on issues ranging from the stock market to the cross-strait affairs. During the political tensions that followed former president Lee's clarification that relations with China were "state-to-state" in nature, Liu suggested that Taiwan could launch a missile strike against Hong Kong and the mainland, a comment which he later said was a joke.
Liu said yesterday the bank is not a state-owned firm like "First Commercial Bank or China Airlines," referring to the two flagship national firms.
Analysts say that the DPP may be trying to send a message to China Development's shareholders, though it is difficult to see how far the Chen Shui-bian (
"It all depends upon whether it is worth all the fuss," said a banking analyst at a leading foreign brokerage, who requested anonymity. "And it all depends on how loyal Chen Shui-bian and the DPP members are to Lee and his friends."
Liu is also seen as having close ties to many DPP legislators. Notwithstanding Liu's influence, economists say that the DPP should try to ensure that China Development's board of directors reflect its shareholder profile.
"I fully agree that the government should divest its share in China Development," said Chang Ching-hsi (
The Bank of Taiwan (
Several state-owned banks control a combined 8.91 percent stake in the bank, representing the largest institutional portion.
China Development has stakes in hundreds of high-tech firms all over the world.
The bank said last month that it will establish an asset management company in joint venture with Morgan Stanley Dean Witter to help manage Taiwan's non-performing loans.
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