Wed, May 03, 2000 - Page 17 News List

Ailing bank in takeover conjecture

LOAN SCANDAL The Ministry of Finance said that several foreign and local commercial banks are interested in taking over Chung Shing, giving some of the bank's employees reason for hope

STAFF WRITER WITH BRIDGE NEWS

Chung Shing Bank (中興銀行), currently mired in a loan scandal, refused to comment yesterday on a local press report that the Ministry of Finance (財政部) had been contacted by some foreign and "new" Taiwan banks that are interested in taking Chung Shing over.

But a unidentified bank official said the news was encouraging, adding that most employees would be delighted to see a takeover of the troubled bank.

Local media yesterday quoted Minister of Finance Paul Chiu (邱正雄) as saying that several foreign banks and some "new" Taiwan banks had contacted the ministry expressing an interest in taking over Chung Shing.

Taiwan's "new" banks refer to those that opened in the early 1990s when the government lifted its restrictions on the issuance of new banking licenses.

Chiu noted that the ministry would not want state-run banks or bills finance companies taking over the bank, according to reports.

Chung Shing officials declined to comment or reveal if any bank had been in talks about such a move. A bank executive would only say that most bank employees would welcome such overtures.

"I believe most employees are happy to see that someone wants to take over the bank because we hope we can get over this [current] difficulty as soon as possible," he said.

The executive also confirmed that the bank's chairman Wang Yu-yun has agreed to sell his 1.1 percent holding in Chung Shing, adding that Wang and his relatives held a combined 13 percent to 15 percent of the bank's shares at the end of March.

Local media also said yesterday that an initial investigation into Chung Shing's books found that the bank's overdue loan ratio is 10 percent -- far higher than the 4 percent Chung Shing had reported.

Meanwhile, reports yesterday said that three bills finance companies that had earlier agreed to purchase Chung Shing's NCDs may change their minds.

But a Chung Shing official said the reversal wouldn't create a liquidity problem for the bank, adding that if the three companies don't want to purchase the NCDs other banks would.

Moreover, an ongoing run at the bank is expected to come to an end this week and, therefore the bank sees no immediate liquidity shortfall, the official added.

The ministry discovered last Wednesday that two of the bank's branch managers had abused their authority in making loans to Taiwan Pineapple Co (台鳳) and its affiliates without proper authorization.

The news has prompted panic among depositors who scrambled to withdraw nearly NT$10 billion from the bank late last week.

In a related development, Top Construction & Development, a property developer, has bounced roughly NT$100 million in checks, local media reported yesterday, citing unidentified company officials.

Top Construction Chairman Wang Shih-hsiung, son of troubled Chung Shing Bank Chairman Wang Yu-yun, may place the company in receivership if he is unable to find a buyer. Chung Shing and China Development Industrial Bank (中華開發工業銀行) are major creditors of Top Construction.

The Chung Shing loan scandal has also spread to Taiwan International Securities, which said yesterday it may be investigated for alleged insider trading.

According to the brokerage house, the inquiry stems from the Securities and Futures Commission's (證券會) discovery that Taiwan International transacted a large volume of Chung Shing shares.

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