Decision time looms in battle for CHB board

By Ted Chen, The China Post

The outcome of the prolonged battle to control the management of Chang Hwa Bank (CHB, ���ƻ�) is likely to unfold by the end of this week, following a call-to-arms issued by the Ministry of Finance urging a number of state-run banks to secure a bigger stake in the firm founded during the Japanese occupation of Taiwan. Reports indicate that a host of state-run banks and government affiliated entities are expected to collectively accumulate a 24-percent to 25-percent stake in CHB, enough to thwart rivaling Taishin Bank’s (�x�s) ambitions to merge with the historic bank.

Finance ministry officials, however, on Sunday announced that they respect the investment strategies of state-run banks, while bank officials hinted that meetings discussing CHB have been growing in frequency recently, implying that they have been called upon to meddle in CHB’s upcoming board election.

Reports indicate that while the finance ministry did not specify stakeholding targets for government-run banks, each bank will work toward obtaining a 1 percent hold on CHB.

The finance ministry reiterated that the government hopes to see a fair, just and procedurally sound board of directors’ election at CHB, while calling upon a number of regulators to uphold market order.

Most notably, with CHB’s board of directors’ election set to take place on Dec. 8, tomorrow represents the final trading day when rival government-affiliates and private banks may acquire more CHB shares through the open market to influence the outcome of the board election, as on Friday this week CHB shares will be required to undergo a period of closed books.

Market observers noted that in addition to the amount of CHB shares held by rival factions, the number of shareholders each side may gain overall will ultimately decide the outcome of the proxy battle to establish dominion over the bank’s board. Finance Ministry Bristles at Taishin’s Firm Stance Reports indicate that as of June this year, shares held by the government-affiliated faction and Taishin were evenly matched and last tallied at about 20.45 percent and 22.5 percent, respectively. However, Taishin Chairman Thomas Wu (�d�F�G) reportedly enlisted a number of personal connections to bolster the amount of CHB shares held by the private sector contender, gearing up to challenge the hold of the government-affiliated faction.

The CHB board last week approved of a measure to set its membership composition to allocate three seats for independent directors, with Taishin vowing to take four directors’ seats and two independent directors’ seats, a gesture of the company’s strong resolve to establish a leading presence on the board’s audit committee.

Reports indicate that the finance ministry is mobilizing its allies in response to the seemingly uncooperative stance taken by Taishin bank, with Vice Finance Minister Wu Tang-chieh (�d����) urging the public to support the government’s efforts to retain control of CHB, an asset collectively owned by all tax payers.