Update: Taiwan’s CTBC Financial Plans to Buy Rival Shin Kong

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

Amid speculation swirling of a takeover, the Taipei-based firm announced it will file an application for a tender offer to the Financial Supervisory Commission, according to a statement Tuesday. The price will be announced after approval from regulators, it said.

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

A CTBC Bank branch; Photo credit: Gabriela Bhaskar/Bloomberg

Still, CTBC’s plans could run into opposition since it was earlier reported that Shin Kong and Taishin Financial Holding Co., a smaller rival, 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. in 2023 also sold its local banking business to DBS Group Holdings Ltd.

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

Fines

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

Shin Kong, whose businesses span across insurance, brokerage and underwriting, has in recent years faced a series of crises. In 2020, the firm’s life insurance subsidiary was fined NT$27.6 million for poor internal controls. A few months before that punishment was announced, founder Wu Tung-chin stepped down as chairman.

The FSC also in 2023 fined CTBC NT$30 million and suspended the duty of its chairman for six months due to poor corporate governance and a 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 finance industry to become a bigger part of economic output amid a tech-led boom in investments.

Taiwan’s benchmark stock index has surged 25% this year.