The Financial Supervisory Commission (FSC) is mulling tighter acquisition measures that would require financial holding companies intent on acquisition activity to first win the regulator’s approval of their plans and then obtain a controlling stake in the companies in which they plan to invest through the open market.
The financial regulator will discuss changes to merger and acquisition regulations at its weekly committee meeting today with a view to making territorial expansions more effective, but decrease the uncertainty that it brings to the market, the commission’s banking division said.
The planned policy change marked another move by FSC Chairman Chen Yuh-chang (陳裕璋) to straighten out the banking industry, which has seen a number of hostile takeover attempts in recent years.
Some acquisition bids remain in limbo for years, hindering efforts to integrate Taiwan’s overcrowded and fragmented banking sector.
According to an FSC official who declined to be named, under the new measure, financial holding companies seeking to acquire another financial firm must acquire a 25 percent stake in the latter within a set period of time to make it a subsidiary.
The buyer must first gain approval from the commission and embark on share purchases within three months after the commission gives its go-ahead, the official said by telephone yesterday.
The buying party must purchase at least 25 percent of the shares in the second company through the open market in one attempt, which should last from 10 days to 50 days and may be extended by 30 days if necessary, he said.
Currently, companies need only acquire a 5 percent stake to show interest in other financial firms.
The low hurdle is partly blamed for the dilemma plaguing Taihsin Financial Holding Co (台新金控), which owns a 22.5 percent stake in Chang Hwa Commercial Bank (彰化銀行).
Chinatrust Financial Holding Co (中信金控) owns an 11 percent stake in Mega Financial Holding Co (兆豐金控), which owns a 13.44 percent stake in Taiwan Business Bank (台企銀行).
The new measures will apply to acquisitions of financial holding companies, banks, insurers and securities brokerages. For purchases of capital leasing and investment firms, a controlling stake means ownership of at least 50 percent of its shares, the official said.
Companies that fail to meet the requirements to acquire a controlling stake must divest their shares in the second company and relinquish board seats before an election of new board members, he said.
Vanney Cho (卓長興), senior vice president at Chinatrust Financial, said the company has put its Mega Financial shares into trust for sale in the future.
Grace Lin (林瑞雲), chief financial officer at Mega Financial, said the company’s board has agreed to divest its shares in Taiwan Business Bank before 2012.
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