The Financial Supervisory Commission (FSC) on Tuesday said that China Development Financial Holding Corp (CDFHC, 中華開發金控) should honor its commitment to fully acquire China Life Insurance Co (中國人壽).
“The financial conglomerate had many reasons when it applied to us to delay the deal in February. We found some acceptable, whereas others were not,” Banking Bureau Chief Secretary Phil Tong (童政彰) told a news conference in New Taipei City.
“We are still reviewing the case and will concentrate on whether the delay would affect the company’s shareholder equity and impact the order of the financial market,” Tong said.
“We will also confirm whether it is necessary and reasonable for CDFHC to delay the deal, and what efforts the company has made to close the deal,” he said. “Then we will decide whether to grant a grace period for the company and how long that period should be.”
The commission would make a decision by the end of this month, he added.
CDFHC holds a 34.82 percent stake in China Life after it acquired 25 percent of the insurer’s shares at NT$35 per share on Sept. 13, 2017.
The commission, which encourages financial conglomerates to fully own their subsidiaries, at the time required CDFHC to complete the acquisition within two-and-a-half years, and the company had promised that it would fully acquire China Life by March 13 this year.
However, the company in January said that it decided to delay the deal as it predicted China Life’s retail shareholders would not be interested in selling their shares at a time when prices were low.
Shares in China Life, the nation’s fifth-largest life insurer by market share, steadily retreated from NT$33.88 on Sept. 13, 2017, to NT$17.25 yesterday.
Tong said that being unable to follow through on its original acquisition plan might demonstrate the quality and effect of the company’s corporate governance.
“Financial institutions should keep their promise to the regulator, as in this highly supervised industry, [keeping a promise] is as important as complying with the law,” Tong said.
Even though the commission could not fine CDFHC for breaking a promise, it could adopt other administrative measures to address the issue, he said.
Meanwhile, CDFHC on Monday announced that it would issue debentures worth NT$8 billion (US$263.96 million) with maturities of up to 15 years, to help repay its debts.
The firm is the second financial conglomerate planning to issue bonds to take advantage of lower interest rates after the central bank cut its policy interest rate by 25 basis points on March 19.
Shin Kong Financial Holding Co (新光金控) on Friday last week announced that it would issue five-year bonds worth NT$3 billion.
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