Chinese-language newspaper the Economic Daily News reported yesterday that the government is considering buying an unspecified stake in Chang Hwa Commercial Bank (彰化銀行) from Taishin Financial Holding Co (台新金控) to regain control of the bank, paving the way for the re-election of its board next year.
The Ministry of Finance did not rule out the possibility, but it said in a statement issued yesterday that nothing has yet been finalized. The ministry owns about an 18 percent stake in Chang Hwa Bank.
To that end, the government is not ruling out the possibility that it will ask state-run financial firms, such as Hua Nan Financial Holding Co (華南金控), First Financial Holding Co (第一金控) or Taiwan Cooperative Bank (合作金庫銀行) to carry out the purchase, the newspaper said.
Taishin controls a majority of seats on the Chang Hwa board after winning a bid auction in 2005 for 1.4 million preferred shares that gave it a 22.5 percent stake in the lender.
The auction drew vehement criticism from Chang Hwa employees and lawmakers, and Taishin has delayed proceeding with a full-blown merger.
The government could help end the dilemma, inspired by Capital Securities Corp’s (群益證券) recent acquisition of Taiwan International Securities Corp (TISC, 金鼎證券), which resolved a five-year boardroom dispute.
Capital Securities offered last month to buy shares both from the owners of Taiwan International Securities and from China Development Financial Holding Co (中華開發金控), which had sought to take over the brokerage since 2006.
While Chang Hwa will not elect new board members until November next year, the government will need to start planning a year ahead given the complexity of any deal, the daily said.
The finance ministry said it respects the market regime as well as the interests of shareholders and employees when handling government stakes in financial institutions.
“The ministry will not comment on matters that are not finalized to avoid affecting share prices,” a statement said.
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