Fri, Mar 29, 2002 - Page 17 News List

First Commercial won't reveal auction price

By Joyce Huang  /  STAFF REPORTER , WITH BLOOMBERG

Following the auction of NT$13 billion in collateral from non-performing loans on Wednesday, First Commercial Bank (第一銀行) yesterday remained reluctant to reveal the closing price placed by auction winner Cerberus Asia Capital Management LLC.

Most of the properties in the sell-off were collateral from home mortgage defaults.

"Other lenders have plans to write off their non-performing loans. If we made our closing price public, the pricing process of their assets for auction will be affected," said Huang Shiu-nan (黃秀男), vice president of First Commercial Bank, citing a confidentiality clause the bank signed all auction bidders.

The bank withheld the auction price under the advisement of PriceWaterhouseCoopers and plans to write off a total of NT$62 billion non-performing collateral by the end of June, he said.

But PFP legislator Norman Yin (殷乃平) said that First Commercial, as a listed company on the stock market, is obliged to submit financial reports to the Taiwan Stock Exchange (證交所) for the reference of shareholders and investors.

"There's no way the bank can hide its losses, although holding closed-door auctions is a normal practice," Yin said.

Yin has long advocated that transparency at local banks should be improved to beef up the financial sector.

According to Chinese-language media reports, the bank's chairman, Jerome Chen (陳建隆), said that "the closing price is much higher than the bank's reserve price."

Chen also vowed to lower the bank's ratio of non-performing loans from current 9.24 percent to around 2.5 percent.

The auction winner, US-based Cerberus, a unit of Cerberus Partners LP, has decided to form an asset-management company with Taiwan Securities Co (台証證券) to seek investment opportunities among the country's NT$1.6 trillion in troubled loans.

Taiwan Securities president Lin Keh-hsiao (林克孝) said that Cerberus will provide the funds for non-performing acquisitions and their venture may require "just a few tens of millions of dollars."

Jaideep Krishnna, Cerberus' managing director, said the company is confident about Taiwan's markets. Cerberus, with a fund of US$8 billion, has already invested about US$3 billion in Asia before entering Taiwan's impaired assets market.

"If there are good opportunities and returns in Taiwan, we could be investing a significant amount of money here over the next one or two years," Krishnna said.

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