In a move supported by the Ministry of Finance (
Chinese-language newspaper the Commercial Times, which is owned by the China Times Group, on Wednesday published a report claiming the bank was being investigated by the Ministry of Finance for a possible takeover.
But the bank has hit back, saying the information used in the report was inaccurate and misleading.
"Some members of the media used outdated information to make up a report saying that the finance ministry was considering other banks to take over the Bank of Overseas Chinese," Day Lin-in (
"Also after reading Wednesday's evening newspapers, they all did balanced reporting on the Bank of Overseas Chinese bank run incident, except the China Times Group (China Evening Times, 中時晚報). It is obvious that the China Times Group maliciously manipulated the unsubstantiated report against the bank," Day said.
Day stressed that the bank "would not tolerate" the report.
The finance ministry agreed.
"The professionalism of the mass media is indeed questionable when a newspaper report can cause a bank run to be triggered on a commercial bank with a net worth of more than NT$15 billion without any loan scandal or rising overdue loan ratio (ODL)," said Tzeng Gwo-lieh (
Several other finance ministry officials have supported Day's legal action, including Minister of Finance Shea Jia-dong (
Day said he asked the bank's president Chang Ching-tang (
"No financial institution can withstand rumorous attacks, especially given the fierce competition nowadays in the financial sector. The rumor has made the bank a worthless financial institution to the public. It's a heavy blow to the bank," he said.
"The bank's bank-run incident has already created heavy losses to the bank," Day said. "After NT$3 billion in emergency withdrawals from depositors on Wednesday, (we) will lose more than NT$100 million over the next two years.
"In addition to the damages done to the bank's reputation, the total loss is immense and difficult to estimate.
"Since the survival of financial institutions depends solely on reputation, the incident will make it hard for the bank to regain its reputation for years. Therefore I am going to sue them (China Times) and ask for damages of at least NT$10 billion."
Day further pointed out that the bank has been prepared to write off NT$3.8 billion of the bank's NT$20 billion loans due at the end of last year.
The bank had further decided to write off all non-performing loans following a report by the Central Deposit Insurance Company (CDIC, 中央存保) that there was another NT$1.1 billion of non-performing loans outstanding. Therefore a total of NT$6 billion has been written-off.
Another bank executive highlighted the belief that the run was caused by malicious intent, saying the bank's overdue loan problem has existed since the second half of last year.
"This is not a new problem. The rise in our bank's overdue loan ratio is not as steep as that of many other banks, such as Chang Hwa Commercial Bank (彰化商業銀行) and Hua Nan Commercial Bank (華南商業銀行). I don't know why the paper just picked on us," the executive said.
"After the write-off, the net-worth (assets minus liabilities) of the bank is NT$15.5 billion. Therefore bank's net-worth is about NT$9.21 per share," Day noted.
After the false report on Wednesday, the Bank of Overseas Chinese's share price has dropped to NT$4.12, which is less than half of its net-worth, Day said.
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