TAIPEI: The chairman of Taiwan's Financial Supervisory Commission (FSC) said yesterday that there is no need to worry that his agency will not thoroughly screen the acquisition of a stake in Taipei-based Chinatrust Financial Holding Co by Hong Kong-listed investment firm China Strategic Holdings.

FSC Chairman Sean C. Chen said an application from China Strategic for approval of the purchase has yet to be received, but he reassured the public that more than two regulatory thresholds will be applied when financial authorities examine the case.

China Strategic agreed to sell Chinatrust a 30 percent stake worth $660 million in Nan Shan Life Insurance Co in exchange for a 9.95 percent share of Chinatrust, worth about NT$20.8 billion ($648 million), through a private placement.

China Strategic bought a 97.5 percent stake from American insurer AIG in October, but the economic affairs authorities' Investment Commission turned down the application to consummate the deal earlier this month and asked China Strategic for more documents.

Regulators frowned over China Strategic's announcement of the deal with Chinatrust before it had received approval to buy Nan Shan Life.

In considering China Strategic's planned acquisition of a stake in Chinatrust, Chen said that according to the Financial Holding Company Act, any shareholder holding a stake of over 5 percent needs to undergo an inspection, and those holding more than a 10 percent stake must be examined.

"China Strategic will need to meet more than two thresholds, so there is no need to worry about it, "Chen said.

The FSC said earlier that the transaction had to first be examined by the Investment Commission and then sent to the FSC for approval.

In addition to the Insurance Bureau of the FSC, Chen mentioned earlier that the FSC's Securities and Futures Bureau and the Banking Bureau will also step in to examine the transaction, as ChinaTrust is a listed financial company and a portion of its company will be bought by overseas interests via a private placement.

China Daily/CNA

(HK Edition 11/25/2009 page2)