Shin Kong Financial Holding Co (新光金控) yesterday said that a director on its board on Thursday proposed creating a task force to study the feasibility of a merger with Taishin Financial Holding Co (台新金控).
The motion was not passed, Shin Kong said.
Shin Kong Financial’s comment came after media reports said that board director Hung Shih-chi (洪士琪) suggested that the company set up a team to assess the feasibility of a merger.
The board did not make a resolution on Hung’s proposal as it was not on the agenda, Shin Kong Financial told the Taipei Times by telephone, adding that it would disclose details if a resolution is passed.
Taishin said in a statement yesterday it did not know anything about the proposal and that it had not received an invitation from Shin Kong Financial to evaluate the feasibility of a merger.
It would keep an open mind toward the matter, Taishin said.
As the companies are part of the “pan-Shin Kong Group (新光集團),” they have discussed the possibility of a merger a few years ago, the statement said.
“It might be good if the two companies have a chance to work together toward the goal this time,” Taishin said.
Former Shin Kong Financial chairman Eugene Wu (吳東進) and Taishin chairman Thomas Wu (吳東亮), who are brothers, in 2002 announced a plan to merge the two firms to establish a single financial conglomerate, but the plan collapsed the same year.
To facilitate the 2002 plan, Taishin asked Shin Kong Financial to set aside NT$19.6 billion (US$682.81 million) to cover potential losses stemming from higher insurance claims.
Because of the additional provision, Shin Kong Financial reported an after-tax loss of NT$8.82 billion instead of a projected profit of NT$3.96 billion that year, angering Taishin, which called off the merger on July 3, 2002, reports said.
The Financial Supervisory Commission would respect a decision by the two companies to merge, Banking Bureau Deputy Director-General Lin Chih-chi (林志吉) told a news conference on Thursday.
The commission had not received any reports from the companies, but if they do file an application to merge, it would examine their capital adequacy and confirm shareholder approval of any deal, Lin said.
As Taishin and Shin Kong Financial have their own banking and insurance units, the merger would be complicated, market analysts said.
If a merger were to proceed, they would face a thorough review from regulators to ensure that the financial market would not be disturbed and consumers’ interests are protected, they said.
Shin Kong Financial’s share price advanced 4.17 percent to NT$11.25 in Taipei trading yesterday, while Taishin’s gained 0.49 percent to NT$20.6, Taiwan Stock Exchange data showed.
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