CDIC to auction Fengshan Credit Co-op

The Central Deposit Insurance Corp (CDIC, 中央存保) is expected to auction off the debt-ridden Fengshan Credit Co-operative (鳳山信合社) today, with seven banks, including SinoPac Holdings Co (建華金控), expressing interest in participating in the bidding.

The management committee of the Cabinet-level Financial Restructuring Fund (金融重建基金) is scheduled to meet this morning to decide the floor price for the bidding. The bail-out fund is similar to the US' Resolution Trust Fund.

The credit unit currently has eight outlets in Kaohsiung County. According to CDIC, the credit unit -- which has capital of NT$300 million -- reported a 50 percent non-performing loan (NPL) ratio as of March.

Banks with a minimum NT$70 billion in assets, a minimum NT$6 billion in net worth and an over 8 percent capital-adequacy-ratio (BIS ratio) are entitled to participate in the auction.

SinoPac, the country's 10th-largest financial holding company by market value, would like to participate in the bidding, as the lender wants to expand its business into the southern part of Taiwan, SinoPac president Paul Lo (盧正昕) told reporters last week.

The Ministry of Finance began two years ago to closely monitor the operation of Fengshan Credit Cooperative as the credit unit's NPL ratio hovered around 40 percent.

In early April, the ministry instructed the CDIC to take over the credit unit.