Capital Securities Corp (群益金鼎證券) yesterday denied a rumor that it is expanding into a financial holding company. The rumor began after its board approved plans to raise its stakeholding in an investment affiliate late last year.
The rumor also reflects market speculation about property developer Hong Tai Group’s (宏泰集團) ambitions. Hong Tai is a backer of the Capital Group (群益集團) and has all the components of a financial holding company, as the conglomerate’s units include Hontai Life Insurance Co (宏泰人壽) and EnTie Commercial Bank (安泰銀行).
On Dec. 15 last year, Capital Securities’ board approved to spend NT$1.53 billion (US$51.71 million) to acquire a 24.04 percent stake in Capital Investment Trust Corp (群益投信) from Commerzbank AG.
The brokerage said the transaction makes it the largest shareholder in Capital Investment Trust, and it aims to yield synergistic gains from improved cross-selling and other ongoing collaborative efforts.
Capital Securities said the transaction would benefit both companies in terms of operational scale and efficiency, but reiterated that it has no immediate plans to expand into a financial holding company.
Its net income last year surged to NT$3.2 billion, compared with NT$1.2 billion the previous year, with earnings per share of NT$1.33.
Capital Securities president Chao Yung-fei (趙永飛) has said that the two companies would further their partnership between brokerage, proprietary trading and underwriting businesses, while the brokerage would serve as a liquidity provider for new products underwritten by Capital Investment Trust.
As of Nov. 30 last year, Capital Investment Trust managed NT$134 billion in assets, the third-highest of its peers and the biggest among firms that are not under a financial holding company.
Passive investment products such as exchange-traded funds have been well received by the market, Chao added.
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