Chung Shing auction raises NT$37.4bn

The Central Deposit Insurance Corp (中央存保) yesterday auctioned off NT$37.4 billion of bad loans at the debt-ridden Chung Shing Bank (中興銀行) to three asset management companies.

Lone Star Asia-Pacific Ltd, the biggest investor in distressed Asian debt, won the portfolio's corporate tranche, whose book balance amounted to NT$17.2 billion, at a cost of NT$4.03 billion, Central Deposit said in a press statement.

Lehman Brothers Commercial Corp (Asia), the fourth-largest US securities firm, and Taiwan Asset Management Corp (台灣金聯) jointly won the portfolio's individual tranche, whose book balance amounted to NT$11.6 billion, at a cost of NT$4.19 billion, the statement added.

The recovery ratio for the auction was 23.4 percent for the portfolio's corporate package and 36.1 percent for its individual package, according to Central Deposit.

Jay McLennan, president of Lone Star, expressed satisfaction with the deal yesterday, saying, "It's a worthwhile investment."

Two other bidders, Cerberus Asia Ltd and China Development Asset Management Co (中華開發資產管理公司), also signed up for the auction, but failed to win any bids.

After writing off NT$37.4 billion-worth bad loans yesterday, Central Deposit plans to hold another auction early next year to sell off the bank's remaining bad loans with a face value of over NT$40 billion.

Central Deposit is charged with helping revive the bank after the lender was placed under government supervision three years ago.

Meanwhile, the CDIC will hold an auction on Monday to sell off another failed bank, the Kaohsiung Business Bank (高雄企銀).