The Ministry of Finance yesterday said it would not back off from a battle over the management rights of state-run Chang Hwa Commercial Bank (CHB, 彰化銀行), adding that the government and its allies now control a larger stake than Taishin Financial Holding Co (台新金控).
The tough rhetoric points at further wrangling in the run-up to the bank’s board election on June 16.
Minister of Finance Sheu Yu-jer (許虞哲) reiterated the government’s stance one week after the Taiwan High Court asked the ministry to comply with a 2005 agreement and help Taishin Financial win majority seats on Chang Hwa Bank’s board.
The high court said on Wednesday last week that as long as Taishin Financial remains the largest shareholder of Chang Hwa Bank, the ministry should support Taishin Financial in its bid to win five seats on Chang Hwa’s board and subsequent management rights.
“The matter is far from over... The ministry will file an appeal and the Supreme Court will have the final say,” Sheu told a news conference in Taipei.
The high court’s ruling ran counter to a legislative resolution that bans government shares from backing non-government stakes, he said.
INAPPROPRIATE
The court’s order to help Taishin Financial gain five directors’ seats is inappropriate and impractical, because Chang Hwa Bank’s capitalization has undergone a structural change, Sheu said.
National Treasury Administration Director-General Frank Juan (阮清華) said the government and its allies control almost 30 percent of Chang Hwa Bank shares — far larger than Taishin Financial’s 22.5 percent stake.
If Taishin Financial wins five directors’ seats, there would be only one left for the ministry and its allies, Juan said.
The bank’s shareholders are to elect nine directors, including three independent ones.
Taishin Financial has asked state-run Taiwan Cooperative Bank (合庫銀行), Hua Nan Commercial Bank (華南銀行) and First Commercial Bank (第一銀行) to stop buying authorization letters, citing the court’s opinion.
NON-BINDING
Sheu said the court’s verdict has no binding effect on those banks that are seeking to protect their own interests as stipulated by the Company Act (公司法).
Besides state-run lenders, the National Development Fund (國發基金) and Chunghwa Post Co (中華郵政) also own stakes in Chang Hwa Bank.
The ministry in 2005 sold a 22.5 percent stake in then-financially strained Chang Hwa Bank to Taishin Financial for NT$36.5 billion (US$1.21 billion at the current exchange rate) as part of a government initiative to consolidate the industry.
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