Wed, Nov 17, 2004 - Page 10 News List

Taiwan Cooperative Bank goes public

SHARE OFFERING Ahead of its listing, the bank said it will bolster its consumer banking and wealth management businesses, and denied speculation over a merger

By Joyce Huang  /  STAFF REPORTER

Taiwan Cooperative Bank (合作金庫), the nation's second-largest lender by assets, said it would strengthen its consumer banking and wealth management businesses to better serve its 4.5 million clients, ahead of a public offering today with stocks initially priced at NT$16.74 per share.

Heavy demand may push prices much higher, the bank's management said yesterday.

"Share prices will be decided by the market; our first offering [in early October] averaged NT$25.39 per share," bank president Soo Jin-fong (蘇金豐) said after launching the bank's wealth management services.

Today's listing will also pave the way to accelerate the bank's planned privatization next year. The government plans to release a 13.8 percent stake, Soo said, adding that this will reduce the government's ownership from the current 60 percent to 46.2 percent.

The future sale of the government's 13.8 percent stake -- or 305 billion shares -- is expected to generate some NT$5 billion for the nation's coffers, Vice Finance Minister Gordon Chen (陳樹) said.

In the first stage of its IPO, Taiwan Cooperative raised NT$190.4 million (US$5.6 million), auctioning off a total of 7.5 million shares last month at an average price of NT$25.39, higher than the base price of NT$13.95, according to the Taiwan Stock Exchange.

Taiwan Cooperative currently has NT$22 billion in working capital and NT$2 trillion in assets with a net value of NT$61 billion. As of September, the bank had NT$1.65 trillion in savings and NT$1.19 trillion in loans, with a market share of 8.88 percent and 8.66 percent respectively.

The bank's non-performing loan (NPL) ratio (excluding loans under observation) fell from last year's 6.17 percent to 3.79 percent last month. The bank aims to further lower the figure to 3.5 percent by the year's end and 2.5 percent next year, Soo said.

The bank doesn't rule out a recapitalization in the near future, as far as improving the bank's capital adequacy ratio is concerned, Chairman Sean Chen (陳沖) said.

"Ideally, banks should have a minimum capital adequacy ratio of 10 percent," Chen said.

Capital adequacy is a measure of a bank's financial strength, usually expressed as the ratio of its capital to its assets.

According to Chen, the bank had previously issued subordinated debt, which he considered as having a higher cost, to raise its capital adequacy from the previous 8.4 percent to the current 9.2 percent.

Chen also denied market speculation that the bank will expand into a financial holding company by merging with other smaller state-owned banks.

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