Bank employees to petition yuan over merger proposals

Employees of debt-ridden Chung Shing Bank (中興銀行) and state-run Bank of Taiwan (台灣銀行) will jointly submit a petition today to the Control Yuan to investigate the government's two-year takeover of the ailing bank.

They questioned if the Ministry of Finance and Central Deposit Insurance Corp (中央存保) have neglected their duties by allowing Chung Shing's assets to deteriorate, creating losses of at least NT$24.5 billion.

A representative from Chung Shing's labor union, Athena Wu (吳品儀), yesterday accused both government agencies of mishandling the bank's assets, which were worth NT$7.6 billion before Central Deposit's takeover. It now faces a deficit of NT$16.9 billion.

"The bank has become a victim of the Central Deposit's stewardship," Wu said at a public hearing in the legislature. She also voiced the union's opposition to the ministry's suggestion of assigning the Bank of Taiwan to take over Chung Shing, saying that "mergers of the two banks are not likely to work."

"The two banks will not be complementary to each other because their customer base and business scope are so similar," Wu said.

Denying the allegation, Gary Tseng (曾國烈), deputy director general of the Bureau of Monetary Affairs under the finance ministry, said that the government is still working up a deal with other banks, which are currently study Chung Shing's accounting records before offering to buy.

"The government has followed due process in handling the bank's corruption issues," Tseng said.

Wu also urged Tseng and the ministry to safeguard bank employees' benefits while locating a buyer to write off the bank's bad loans.

A representative from the Bank of Taiwan's union, Tsou Kuei-jung (鄒桂蓉), said that employees are strongly opposed to the finance ministry's tack, saying the "Bank of Taiwan's performance will be dragged down if forced to take over Chung Shing."

Citing past experiences, Tsou said that the bank's capital-adequacy ratios have recently fallen from 25 percent to 16 percent.

Bank of Taiwan executive vice president Wang Kao-chin (王高津) implied that although it's within the bank's capacity to comply with the government's financial policies, such a move will come at a heavy price.

He said that taking over Tung-kang Credit Cooperative (東港信合社) in 1999 had cost the bank NT$1.3 billion and taking over 13 other grass-root financial institutions last August had cost it another NT$2.8 billion.

As a result, Wang said that it was difficult for him to feel optimistic about such a takeover.

Tsou urged the government to allow multinational investors to buy off Chung Shing because she said that she was informed that "the finance ministry has been secretly obstructing a European investor from having a hand in the bank's takeover for fear of injecting capital from China."

Tseng did not respond to Tsou's accusation, but said that the government hopes to close the deal and solve the bank's plight as soon as possible.