The government yesterday asked Chang Hwa Commercial Bank (彰化銀行) to propose alternative approaches for selling the government's stake in the bank within the next two months, following the bank's announcement last Friday that it would indefinitely postpone the auction for its global depositary receipt (GDR) issuance, Minister of Finance Lin Chuan (林全) said yesterday.
Including the Chang Hwa case, there will be a total of four state-controlled banking institutions to be merged with either foreign investors or domestic financial companies, Lin told reporters at a press briefing.
"Chang Hwa's move [on the GDR issuance] has not gone smoothly, but new, alternative methods will come out soon," he said.
Chang Hwa called off the proposed GDR issuance of 1.4 billion shares after it failed to reach an agreement with potential overseas buyers on prices. The government currently controls a 23 percent stake in the bank, which is the nation's sixth-largest by assets.
Aside from directly selling the government-owned stake, alternative approaches could include raising domestic capital or putting assets up for auction if many banking institutions express interest in acquiring it, Lin said.
"As long as the process is built upon an acceptable, fair and transparent mechanism, the ministry will support it," Lin said.
Emphasizing that foreign investors are not the only favorable target for mergers, he said the future partner should be able to help lower Chang Hwa's high non-performing loan (NPL) ratio and lift its capital-adequacy ratio.
Chang Hwa posted a 3.84 percent NPL ratio at the end of March, according to data from the Financial Supervisory Commission. The lender's capital adequacy ratio, a measure of a bank's financial strength that is usually expressed as the ratio of capital to assets, was not available on the commission's Web site.
Aside from Chang Hwa, the government has been active in privatizing its 100 percent-owned Central Trust of China (中央信託局), whose business operations include banking, insurance, trade and warehousing.
"Our main priority is to protect [Central Trust] employees' rights and interests," the minister said.
RSS