Taishin Financial Holding Co (台新金控) on Friday said it welcomed a Taiwan High Court ruling confirming that the company and the Ministry of Finance have a contractual relationship regarding management rights of state-run Chang Hwa Commercial Bank (CHB, 彰化銀行).
Friday’s ruling says that as long as Taishin Financial remains the largest shareholder of CHB, the ministry “should support and must not obstruct” Taishin Financial in securing four seats on the lender’s nine-member board and subsequent management rights.
While saying that justice has been served, Taishin Financial in a statement offered an olive branch to the ministry to end the dispute that has continued since 2014.
Photo: Kelson Wang, Taipei Times
“This case has dragged on for nearly six years. It has been tried by different courts [the Taipei District Court, High Court and Supreme Court], and they have unanimously agreed that there is a continuing contractual relationship between Taishin Financial and the Ministry of Finance,” the company said.
“As long as the CHB dispute remains unresolved, there would be no winners. Taishin Financial calls on the ministry to put an end to the lawsuit as soon as possible and propose a settlement,” it said.
Taishin Financial acquired a 22.5 percent stake in CHB in 2005, when the ministry invited strategic investors to buy special shares in the lender through an auction, which Taishin Financial won, paying NT$36.5 billion (US$ 1.24 billion at the current exchange rate) with a 40 percent premium.
The ministry at the time had pledged to help the winner secure majority control over CHB.
“The Ministry of Finance deeply regrets this ruling and will file an appeal in accordance with the law,” the ministry said in a statement on its Web site.
Representatives from CHB’s labor union said they supported the ministry’s decision to appeal, and called on Taishin Financial to immediately dispose of CHB shares and withdraw from the lender’s boardroom, the Chinese-language Liberty Times (sister newspaper of the Taipei Times) reported on Saturday.
Taishin Financial also for the first time said that “if the government proposes to develop a national banking champion, [such as] through the merger of CHB and Mega International Commercial Bank (兆豐銀行) or other state-run financial institutions, Taishin Financial would be glad to see it and fully support it.”
Although the company did not elaborate on what it meant by “support,” on Aug. 11 it said that it might consider selling a 3 percent stake in CHB to fund its purchase of Prudential Life Insurance Co of Taiwan Inc (保德信人壽) from Prudential Financial Inc for NT$5.5 billion.
Taishin Financial today is to hold its second-quarter earnings conference, where its bid to acquire Prudential Life Insurance Co of Taiwan, CHB’s management rights and the High Court’s latest ruling are expected to be the focus of investors.
The ministry has yet to comment on Taishin’s proposal of selling a stake in CHB.
“If Taishin Financial intends to exit the market, it must first put forward its own ideas and the two sides would definitely discuss it,” the Liberty Times quoted an unnamed ministry official as saying.
Taishin Financial filed a lawsuit against the ministry in 2014 after ministry-backed candidates won CHB’s board election and took over management rights of the lender.
In April 2016, the Taipei District Court ruled in favor of Taishin Financial and asked the ministry not to obstruct Taishin Financial’s efforts to gain majority control of the board. The ministry appealed to the High Court.
The High Court in May 2017 ruled in favor of Taishin Financial, saying the ministry should support the company in its bid to win major control of CHB board seats and subsequent management rights.
The ministry again appealed and the Supreme Court last year sent back the case for a retrial.
Prior to the High Court’s latest ruling, the ministry on June 19 retained its majority control of CHB’s board at the lender’s annual general meeting by securing five director seats, compared with Taishin Financial winning one seat and all three independent seats.
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