Taipei, Feb. 6, 2010 (CENS)--The special prosecutors` office conducted an extensive search of the headquarters of Taishin Financial Holding yesterday (Feb. 5) in an investigation of possible irregularities associated with its acquisition of Chang Hwa Bank.

The move may further affect the performance of financial shares as the local market opens today for an extra session, in a special arrangement for the upcoming extended holiday for the Chinese Lunar New Year.

Thomas Wu, chairman of Taishin Financial Holding, and four others were summoned by the special prosecutors` office for interrogation late into the night but were allowed to return home afterwards.

The move was part of the special prosecutors office`s ongoing inquiry into the alleged irregularities associated with the second financial reform, carried out by the administration of former President Chen Shui-bian, which, among other policies, called for the transfer of some government-owned banks to private ownership, allegedly for the enhancement of management efficiency.

Prosecutors suspected that there might be some behind-the-scenes arrangement in the takeover of Chang Hwa Bank by Taishin, in view of the several policy changes of the Ministry of Finance in favor of Taishin during the process. Wu Shu-chen, former first lady, had conceded taking NT$100 million of fund from Thomas Wu, who, however, insisted that the money was a pure political donation.

Taishin Financial Holding issued a statement yesterday denying any irregularity in the deal for Chang Hwa Bank. It pointed out the company spent NT$36.5 billion to own 22.5% stake in Chang Hwa at NT$26 per share, for a premium of NT$11.4 billion over the market price for the stake, thereby outbidding the tenders offered by competitors.
The search of Taishin follows the blow of the dispute over the ownership of Pacific Sogo Department Store to Far Eastern Bank, under the Far Easter Group, and may further weaken the performance of financial shares. Financial share price index plunged 5.53% yesterday, lower than 4.3% decline of the Taiex Index, which closed at 7,217, amid the global market downturn triggered by the credit crisis of some European nations.
In the recent two weeks, the Taiex Index had shed 1,100 points, as foreign investors oversold NT$117.2 billion of stocks during the period.

(by Philip Liu)