Rules on mergers and acquisitions among private-sector financial holding companies are to be eased, the Financial Supervisory Commission (FSC) said yesterday, adding that it aims to promote much-needed consolidation in the sector.
Under the proposed change to rules governing investments by financial holding companies, a buyer would only have to commit to purchasing a 10 percent stake in the target company to initiate a tender offer, down from 25 percent, FSC Chairman Wellington Koo (顧立雄) said on the sidelines of an event at the Taiwan Stock Exchange.
The new rule is to apply only if the buyer intends to operate the acquired financial institution as a wholly owned subsidiary, Koo said, adding that it is restricted to financial holdings seeking to acquire peers, privately run banks or brokerage firms.
Koo, who has spoken in favor of separation between peers in the financial sector, financial institutions and industrial firms, said the proposal does not conflict with his stance, as the target company would become a subsidiary of the purchasing entity.
While the change aims to increase flexibility to simplify consolidation efforts, the same eligibility assessment required for investors seeking a 10 percent stake in a financial holding company would still be upheld, Koo said.
However, Koo said the change would not apply to consolidations involving state-run financial holding companies and institutions.
Meanwhile, the commission is working to finalize the details of the modification, including the criteria for assessing the eligibility of buyers and an exit mechanism for when consolidation bids exceed the maximum timeline, Koo said.
Koo’s announcement came after Vice Premier Shih Jun-ji (施俊吉) last week revealed plans to address Taiwan’s crowded financial sector, which he said is overpopulated with small-time players.
In light of stellar profit growth over the past few years, Taiwan’s financial sector is in good enough shape to start a process toward consolidation, Shih said, adding that larger companies could leverage their scale to take on the global market.
Deregulation could provide a much-needed boost to the financial sector, Shih said.
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