Taiwan Business Bank to restructure

State-controlled Taiwan Business Bank (台灣企銀) announced yesterday that it would conduct a two-phased capital restructuring program to improve asset quality and profitability.

"To offset losses and improve financial structure, the bank will first reduce its capitalization by NT$14.12 billion [US$433 million] ... [or 32.95 percent] to NT$28.74 billion," Taiwan Business Bank said in a filing to the Taiwan Stock Exchange.

The lender last year incurred a considerable pre-tax loss of NT$14.21 billion, or NT$3.54 per share, after a huge provision expense of NT$20.63 billion made to cover bad debts.

The capital reduction is expected to increase earnings per share and hopefully raise the share price to the NT$10 level, the bank said.

Taiwan Business Bank will then seek to raise funds of NT$10 billion from employees, original shareholders and investors on the open market to strengthen its capital adequacy, it added.

The bank will seek shareholder approval for its restructuring plan in a general meeting on June 9.

Separately, the Shanghai Commercial and Savings Bank Ltd (上海商業儲蓄銀行) is planning to raise NT$5 billion in funds to increase its capital adequacy ratio to 12 percent from the current level of 10 percent, Chen Yi-ping (陳逸平), the bank's president, said yesterday.