Shares in Land Bank to be sold off

The government plans to sell a 27.4 percent stake in state-run Land Bank of Taiwan (土地銀行) by the end of next year, aiming to raise at least US$426 million to help reduce its budget deficit, according to a senior bank official.

The government will sell 13.5 percent, or 337.5 million shares, of Land Bank in an initial public offering scheduled for the third quarter of next year, followed by the sale of a 13.9 percent stake, or 347.5 million shares in the fourth quarter, Aaron Chou, head of Land Bank's planning department said in an interview.

The government plans to price the shares at no less than NT$20 each, he said. The bank will pick an underwriter for the domestic share offers by the end of the year, Chou added.

The government on Sept. 2 said it may sell shares worth NT$107.8 billion (US$3.35 billion) in state-controlled companies -- including Taiwan Tobacco & Liquor Corp (台灣菸酒公司) and Taiwan Power Co (台電) -- next year to help plug a budget deficit forecast to reach record levels this year. next year to help plug a budget deficit forecast to reach a record NT$304 billion this year. The government also needs money to pay interest on record national debt of more than NT$3 trillion.

The government plans to sell a further 23.6 percent stake of Land Bank to foreign investors in 2006, cutting its holding in the state-run bank to 49 percent, Chou said.

That will qualify Land Bank of Taiwan as a "privatized" company, exempting it from some legislative scrutiny on state-run entities.

"Once the privatization process is completed, we will be able to compete with others more freely," Chou said.