(Corrects entity being acquired in first paragraph.)
Chang Hwa Commercial Bank, a state- backed lender in Taiwan, dismissed a report that it would acquire Taishin International Bank as the government denied initiating a plan to consolidate financial institutions.
Chang Hwa Commercial, based in Taichung, Taiwan, said in a statement that its board didn’t discuss such a deal, reported by Taipei-based Commercial Times today. Taishin Financial Holding Co., the parent firm of Taishin International Bank, called the report speculative in a statement. Taishin Financial’s largest shareholder is TPG Newbridge according to data compiled by Bloomberg.
The newspaper report comes more than four years after an investigation into irregularities surrounding Taishin Financial’s purchase of a stake in Chang Hwa. Former President Chen Shui-bian, who left office in 2008, had encouraged mergers among the island’s financial institutions to boost growth before being convicted of taking bribes while in office and sentenced to life in prison.
Taiwan’s finance ministry holds a 12 percent stake in Chang Hwa. Deputy Finance Minister Tseng Ming-chung called a press conference in Taipei today to deny that the government had initiated a plan to consolidate Taiwan’s state-invested financial institutions.
Taishin Financial’s shares climbed 3.7 percent to the highest since August 2011 at the close of trading in Taipei. Chang Hwa rose 3.6 percent.
“We’re likely to see more consolidation activity in the banking sector in the next one to two years,” said Chuang Piyen, a Taipei-based analyst at Mega Securities Co. He cited President Ma Ying-jeou’s second term as a chance to encourage consolidation in what is a politically sensitive sector.
Private equity firms, whose lock-up clauses on their Taiwan bank stakes are expiring, “might have started finding buyers,” Chuang said by phone today.
Taiwan had 38 domestic banks as of last February, according to the Financial Supervisory Commission’s Banking Bureau.
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