Taiwan's Chang Hwa Bank cuts number of board members

TAIPEI, June 13 (Reuters) - Taiwan's Chang Hwa Bank (2801.TW) approved on Friday a plan to cut the number of its board members and controllers by eight seats, rekindling hopes of its merger with local rival Taishin Financial (2887.TW).

Taishin Financial Holding Co Ltd withdrew its plan to acquire Chang Hwa Bank via a share swap earlier this year, due to objections from Chang Hwa's labor union and some Taishin shareholders not satisfied with a share swap ratio.

Taishin has said it will push for the merger again at an appropriate time.

Analysts say Taishin, which currently has a majority seat in Chang Hwa's board, will be in a better position to take the lead in Chang Hwa's board when Chang Hwa re-elects its board members at the end of the year.

"Taishin will be in a better position in the merger deal," said Mega Securities analyst Cliff Chung.

At its annual shareholders' meeting on Friday, Chang Hwa Bank's shareholders gave the green light to reduce the number of board members to nine seats from 15 seats, and the number of its controllers will be lowered to three seats from five seats, a company official said, without giving further details.

Taishin became the biggest shareholder of Chang Hwa when it bought in 2005 a 22.5 percent stake of the state-run lender from the Taiwan government.

After the 22.5 percent stake purchase, the two companies had to undergo a share swap process to complete the merger.

Over the past few years, the Taiwan government has been trying to push for mergers and acquisitions to consolidate the island's overcrowded banking sector.

On Friday, Taishin shares ended down 1.4 percent while Chang Hwa rose 2.8 percent, outpacing the main TAIEX share index's .TWII 0.5 percent gain. ($1=T$30.4) (Reporting by Rachel Lee, writing by Baker Li, Editing by Ben Tan)