Sinopac sale of US unit to Cathay General at risk as deadline approaches (updated)

SINOPAC FINANCIAL HOLDINGS

16/06/2017 09:50

* Regulator won't approve unless more paperwork submitted 
-source 
    * Sinopac dragging its feet over regrets about valuation 
-sources 
    * U.S. Federal Reserve has imposed June 20 deadline 
 
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    By Faith Hung 
    TAIPEI, June 16 (Reuters) - Taiwan's financial watchdog will 
not approve Sinopac Financial Holdings'  2890.TW  $340 million 
sale of its U.S. unit to Cathay General Bancorp  CATY.O  unless 
Sinopac submits the necessary paperwork, a source with the 
regulator said. 
    Some board members at Taiwan's Sinopac are hesitant to sign 
off on the deal, feeling "seller's remorse" as the price tag now 
looks too low, three separate sources with direct knowledge of 
the matter said. 
    It has been a year since the deal was announced and the foot 
dragging comes ahead of a June 20 deadline imposed by the U.S. 
Federal Reserve, which approved the deal in March, although 
Cathay General, a Los Angeles-based bank, can request an 
extension. 
    A collapse of the deal could also taint the reputation of 
Sinopac and Taiwanese banks in the U.S. market, coming in the 
wake of $180 million in U.S. fines for Taiwan's Mega Financial 
Holding  2886.TW  for violations of rules including lax 
attention to risk exposure in Panama. 
    "We have asked Sinopac to provide additional paperwork. If 
they don't do that, they automatically forfeit the deal," said 
an official at Taiwan's Financial Supervisory Commission. 
    Sinopac needs to explain the full terms of the agreement in 
a satisfactory way, said the official, declining to elaborate.  
    The official and other sources declined to be identified as 
they were not authorised to speak to the media on matter. 
    A spokesman for Sinopac said the company would submit the 
additional paperwork "soon" and hopes that the deal will close. 
    The FSC suspended a review of the acquisition application,  
according to a Sinopac statement earlier this month, which did 
not provide further details.  
    Cathay General did not reply to requests for comment via 
email.  
    Nasdaq-listed Cathay General has complained to Sinopac for 
not trying hard enough to get clearance from Taiwan regulators, 
said the three sources with direct knowledge of the matter. 
    One of the sources said that the price had looked good to 
Sinopac last year amid uncertainties about Britain's decision to 
leave the European Union and the U.S. presidential election. 
    "But now things have changed. The U.S. and global economies 
are showing strong momentum," the source said.  
      
 
 (Reporting by Faith Hung; Editing by Jacqueline Wong and Edwina 
Gibbs) 
 ((faith.hung@thomsonreuters.com; 8862 2500 4893; Reuters 
Messaging: faith.hung.thomsonreuters.com@reuters.net)) 
 
Keywords: SINOPAC CATHAYGENERAL/