Finance

Taishin withdraws case against Ministry of Finance

LONG-TERM DISPUTE:
The two parties have reached an agreement after Taishin in 2014 alleged the ministry had broken a contract regarding board seats at Chang Hwa Bank

  • By Kao Shih-ching / Staff reporter

Taishin Financial Holding Co (台新金控) has settled a dispute with the Ministry of Finance over the management rights in Chang Hwa Bank (CHB, 彰化銀行) and withdrawn its Supreme Court case against the ministry, the company said yesterday.

“We have filed a notice of withdrawal with the Supreme Court, after the ministry and Taishin obtained a satisfactory consensus thanks to the coordination of the Supreme Court judges and mediators,” Taishin Financial president Welch Lin (林維俊) told a news conference at the Taiwan Stock Exchange in Taipei.

The dispute began when Taishin Financial filed a lawsuit against the ministry in December 2014, alleging that it had broken a contract they signed in 2005 about the allocation of board seats at the bank.

Photo: screengrab from the Internet

In 2005, Taishin Financial secured a 22.5 percent stake from the ministry in then-financially strained CHB for NT$36.5 billion (US$1.22 billion at the current exchange rate) and gained a majority on the bank’s board.

However, when the ministry gained a majority on CHB’s board in December 2014, Taishin accused it of breaking its 2005 promise to help Taishin obtain the majority control of the bank.

Taishin had sought NT$10 billion in damage for losses, saying it would not be able to consolidate CHB as a subsidiary because it had lost most of its seats in the state-run bank.

In a joint statement released yesterday, Taishin Financial and the ministry said that to ensure both parties benefit, they would encourage collaboration among their subsidiaries and financial agencies, adding that they are optimistic about cooperation plans.

“The [Ministry of Finance] recognizes Taishin Financial’s contributions through its management team to improving CHB’s performance, strengthening the bank’s corporate governance and boosting profits for shareholders during the nine years (from 2005 to 2014),” the statement said.

Taishin Financial’s capital injection of NT$36.5 billion into CHB in 2005 enabled the bank to write off bad loans, optimize its financial structure and improve its infrastructure, the statement said.

Moreover, CHB’s performance has continued to improve as its net worth has expanded by NT$52.2 billion to NT$171.4 billion over the past seven years, it said.

Prior to yesterday’s announcement, Taishin Financial in 2020 announced that it would sell CHB shares to fund its acquisition of Prudential Life Insurance Co of Taiwan (保德信人壽).

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