IBF Financial Holdings Co (國票金控) on Thursday said that its Japanese joint-venture partner has agreed to waive a non-competition clause, paving the way for the company to invest in a commercial bank in Taiwan.
The partner is Japan-based e-commerce company Rakuten Group Inc, which, through its wholly owned subsidiaries Rakuten Bank and Rakuten Card, set up a virtual bank, Rakuten International Commercial Bank Co (樂天國際商銀), in partnership with IBF.
The Tokyo-based Rakuten Bank and Rakuten Card hold a combined 51 percent stake of the Web-only bank, with paid-in capital of NT$10 billion, while IBF holds the remaining 49 percent.
Photo: Lee Ching-hui, Taipei Times
IBF did not disclose whether it has or will compensate the Japanese partner for canceling the non-competition agreement, only saying that with the waiver, it can proceed with negotiations with the target firm, it said in a filing to the Taiwan Stock Exchange (TWSE).
Speculation has circulated that EnTie Commercial Bank (安泰銀行) is the target bank, but IBF executive vice president Andrew Chiu (邱銘恩) told the Taipei Times by telephone that the financial holding company is still evaluating which commercial bank to invest in and has not reached a final decision.
IBF’s board of directors has been discussing the investment since February, and while most directors agreed that IBF should seek acquisition opportunities, two independent board members — Chen Wei-lung (陳惟龍) and Wu Ching-sung (吳青松) — expressed concern that it could weaken IBF’s financial strength and ownership stability, company filings with the TWSE showed.
The pair said the acquisition would be too expensive, the target bank’s loan quality was not satisfactory, and if IBF issued convertible preferred shares to fund the deal as planned, it would affect the stability of its shareholding structure, the filings showed.
Under current banking regulations, IBF is not barred from acquiring a conventional bank even though it already has a virtual bank, Financial Supervisory Commission Chairman Thomas Huang (黃天牧) told a meeting at the Legislative Yuan in March.
However, the commission will have to consider whether IBF is financially sound to simultaneously support two banking units, as “it takes considerable capital to operate two different types of banks,” Banking Bureau Director-General Sherri Chuang (莊琇媛) told the meeting.
IBF chairman Wea Chi-lin (魏啟林) told an investors’ conference in April that acquiring a physical channel would raise the company’s efficiency, and IBF would pursue acquisitions that are good for shareholders’ equity.
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