Taiwan’s CTBC Financial plans to buy rival Shin Kong

CTBC Financial Holding Co. of Taiwan said it plans to buy smaller rival Shin Kong Financial Holding Co., a move that could form the island’s largest financial conglomerate.

Amid takeover speculation, the Taipei-based firm said it will file a tender offer request with the Financial Supervisory Commission, according to a statement on Tuesday. The price will be announced after regulatory approval, it said.

CTBC, Taiwan’s third-largest financial holding firm by assets, said the deal would allow it to “go global” and build a regional financial institution, according to a statement. The combination would form a company with NT$13.6 trillion ($426 billion) in assets, surpassing Cathay Financial Holding Co., according to FSC data.

However, CTBC’s plans could run into opposition as it was previously reported that Shin Kong and smaller rival Taishin Financial Holding Co. were also mulling a combination.

Any deal would mark the first financial holding transaction in Taiwan since Fubon Financial Holding Co. acquired Jih Sun Financial Holdings Co. in 2022. Citigroup Inc. also sold its local banking business to DBS Group Holdings Ltd in 2023.

Shin Kong rose 6.3 percent on Tuesday, bringing its market value to NT$202 billion. Taishin rose 0.8% and CTBC was flat.

FINES

Taiwan’s United Daily News reported that CTBC plans to buy more than 50 percent of Shin Kong’s shares in the fourth quarter, if the regulator approves its bid, before buying 100 percent of the shares to complete the takeover.

Shin Kong, whose businesses span insurance, brokerage and underwriting, has faced a series of crises in recent years. In 2020, the company’s life insurance arm was fined $27.6 million for weak internal controls. A few months before this punishment was announced, founder Wu Tung-chin resigned as chairman.

Also in 2023, the FSC fined CTBC NT$30 million and suspended its chairman for six months for poor corporate governance and failure to operate internal controls effectively.

The head of Taiwan’s financial regulator said in June that he wants to ease rules to allow the financial industry to become a bigger part of economic output amid a technology-led investment boom.

Taiwan’s benchmark stock index is up 25% this year.

Copyright 2024 Bloomberg.

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Mergers and acquisitions