Presidents of Shin Kong, Taishin visit FSC ahead of merger talks

Taipei, Aug. 20 (CNA) The presidents of Shin Kong Financial Holding Co. and Taishin Financial Holding Co. visited the Financial Supervisory Commission (FSC) on Monday ahead of prospective merger talks.

Stephen Chen (陳恩光), president of Shin Kong Financial, and his counterpart of Taishin Financial Welch Lin (林維俊) met with Chuang Hsou-yuan (莊琇媛), head of the FSC's Banking Bureau, at the FSC in Taipei.

The two financial firms, however, declined to disclose the details about the Monday's meeting, only saying the companies will issue formal announcements at a time when any material information is available.

Sources close to the matter said the visit was initialed by Shin Kong Financial and Taishin Financial before their board meetings scheduled for Thursday, adding that the visit by Chen and Lin aimed to move their planned merger ahead.

Analysts said the two companies had to persuade the FSC, Taiwan's top financial regulator, that the merger would create synergies. In addition, executives at both firms need to obtain shareholders' support.

A possible merger of the two financial holding firms has been circulated in the market for some time.

Market analysts said foreign institutional investors had started to raise holdings in Shin Kong Financial shares in particular after the speculation emerged on Aug. 16, indicating the merger would proceed through a stock swap under which 0.510 Taishin Financial shares will be allocated in exchange for 0.565 Shin Kong Financial shares.

The sources said the board meetings are expected to discuss the stock swap for the merger.

On Monday, Shin Kong Financial shares soared 2.3 percent to close at NT$11.1 (US$0.35) on the main board, while Taishin Financial shares ended down 1.06 percent at NT$18.6.

Shin Kong Financial and Taishin Financial had been in talks over a merger as early as 2002 but the negotiations fell apart. Speculation about a merger of the two companies has continued after that.

Shin Kong Financial and Taishin Financial were founded by Eugene Wu (吳東進) and his brother Thomas Wu (吳東亮), respectively, both of whom are from the wealthy Wu Family, which owns the conglomerate Shin Kong Group.

Analysts said Taishin Financial is good at banking and the merger is expected to allow the company to take advantage of Shin Kong Financial's strength in insurance and securities businesses.

In Taiwan, a financial holding company owns three major operations: banking, insurance and securities.

A merger of financial holding firms in Taiwan usually costs the companies in the deal no less than one year to complete after the transaction is approved by shareholders and the financial authorities.

Due to the strong gains enjoyed by Shin Kong Financial on Monday, the Taiwan Stock Exchange (TWSE), where shares of the financial holding firms are traded, said it would launch a probe into whether information about the possible merger had been leaked ahead of an official announcement made to the public.

The TWSE said if trading regularities are found, it would send the case to the FSC's Securities and Futures for possible punishment.