The government's proposal to auction off state-run Central Trust of China (
Lawmakers demanded that another legislative review be arranged, and also stipulated two conditions.
Firstly, Vice Premier Wu Rong-i (
In addition, Central Trust must ink a collective agreement with its employees to safeguard their rights before the privatization goes forward, Lin said.
The Ministry of Finance first outlined its plan to privatize Central Trust to the legislature in May. The government plans to sell the institution's banking unit, with a net value of NT$5.8 billion (US$173 million), and its life-insurance unit, valued at NT$3.5 billion, in separate auctions.
Central Trust chairman Shea Jia-dong (許嘉棟), told the committee yesterday that after deducting costs of NT$15 billion to protect employee rights, the auction should bring in a combined net profit of between NT$2.5 billion and NT$10 billion, based on estimates by the bank's financial consultant, ABN AMRO Bank.
In other words, the floor price should fall between NT$17.5 billion and NT$25 billion.
Finance Minister Lin Chuan (
Concerned about potential job losses, the Central Trust of China Employees Union (中央信託局產業工會) said it would support a merger with two other state-run banks, the Bank of Taiwan (台灣銀行) and the Lank Bank of Taiwan (土地銀行).
"The merged entity can create operational synergy as it would be equipped with banking, insurance and securities businesses," a statement issued by the union yesterday said.
Lin said the ministry would not rule out the possibility if the auction plan fails to clear the legislature.
Chinese Nationalist Party (KMT) Lawmaker Fei Hung-tai (費鴻泰) said that state-run financial institutions were big buyers when Taishin Financial Holding Co (台新金控) raised NT$38 billion by issuing preferred shares and subordinate debt in a bid to buy a controlling stake in state-run Chang Hwa Commercial Bank (彰化銀行) in July.
"Of the NT$15 billion of preferred shares issued, five state-run institutions bought over 30 percent, or NT$5.65 billion, while Taishin Financial only spent NT$1 billion. How can you say that financial reform is aimed at withdrawing the government ... from the market?" Fei said.
Lin said he was not aware of the investments, but the banks were entitled to independence.
The five state-run institutions were Taiwan Life (台灣人壽), which invested
the most, at NT$3.99 billion, the Bank of Taiwan, Hua Nan Financial Holdings
Co (華南金控), Central Trust and Central Reinsurance Corp (中央再保).
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