Taiwan Cooperative Bank (
"We may consider seeking foreign investors such as insurers, which should have an interest in buying a minority stake because of our widespread network," bank chairman Sean Chen (陳沖) told reporters in Taipei.
The bank, with 183 branches nationwide, is the third-largest lender in terms of branch numbers, Chen said.
The bank on Oct. 14 raised NT$190.4 million (US$5.6 million) selling 7.5 million shares in the first stage of its initial public offering. The shares fetched an average selling price of NT$25.39 at an auction. The sale was part of the bank's plan to sell 20 million shares, or a 0.9 percent stake.
The remaining 12.5 million shares will be sold at a price of NT$16.74 a share, and the entire IPO may raise NT$400 million, Chen said. The government wants to reduce its 60 percent stake in the bank to 46 percent by the end of the year or early next year, according to Chen.
That would comply with the government's definition of a privatization -- when state ownership of a state company falls below 50 percent.
Chen said the bank will have to pay NT$18.5 billion to compensate employees for early retirement once it transforms into a private lender. It has made NT$11.2 billion of provisions so far and must set aside an additional NT$7.3 billion in the next two years. The provisions will continue to reduce profits, he said. Chen wants to transform a bank now focused on helping farmers to one that serves an array of businesses. Agricultural associations and some individuals will continue to hold about 40 percent of the lender.
"Privatization is not just selling shares," Chen said. "More important, we have to seek privatization in management and mindset."
The bank's employees are "normally conservative" and must be taught to be innovative, he said.
The lender hopes to increase its capital adequacy ratio to more than 10 percent in the future, up from 9.5 percent now, Chen said, declining to give a time frame. Capital adequacy is a measure of a bank's financial strength, usually expressed as a ratio of its capital to its assets.
Taiwan Cooperative Bank expects to cut its overdue loan ratio to about 3.5 percent by the end of the year, from 3.8 percent at Sept. 30 and a record 7.8 percent in 2000.
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