Government takeover puts Chung Shing Bank in debt

Chung Shing Bank (中興銀行) shareholders pressed the government at a public hearing yesterday to take responsibility for the bank's net worth plunging deep into the red.

"After the government took over the bank's management one-and-a-half years ago, the bank's net worth has declined from some NT$7.61 billion [June 30, 2000] to negative NT$3.96 billion [Sept. 30, 2001]," shareholder Hsieh-Wang Shi-hung (謝王識宏) told officials from the Ministry of Finance. "Can we file for national compensation or not?"

He also urged the government to clarify the bank's ratio of bad loans after rumors were circulating that the bank's bad loans were up to "NT$40 billion or NT$80 billion."

He said that shareholders have been kept in the dark about the government's management following the takeover. Chung Shing Bank was taken over last April following a loan scandal involving Taiwan Pineapple Corp (台鳳).

Another shareholder surnamed Hsueh (薛) said she panicked when she read a newspaper report, that said the bank's net worth was actually negative NT$30 billion. Sobbing, she said she realized her shares of stock have no paper value at all.

Securities & Futures Commission (證期會) Chairman Lin Tzong-yeong (林宗勇) said that the government had done its best to bail out the "debt-ridden bank."

"Before the government stepped in, the bank's top ten lenders were already burdened with a bad credit record and evidence of fraudulent collateral use, auditor reports revealed. These errors were behind the drop in the bank's net worth -- not the government's takeover," Lin told shareholders.

Lin flatly denied the newspaper report that the bank is running a deficit over NT$30 billion.

The government had filed criminal and civil compensation lawsuits against former bank officials who were suspected of neglecting their duties by giving loans to problematic lenders.

In addition, shareholder representative Chen Ching-yi (陳欽義) said that the bank's former board members had inappropriately collected NT$21 million in 1998.