Shin Kong to inject funds into banking arm: TSE

Shin Kong Financial Holding Co (新光金控), the nation's eighth largest financial services provider, plans to inject a further NT$3.73 billion (US$114.5 million) into its banking arm, the company said in a filing to the Taiwan Stock Exchange yesterday.

The investment would be completed by the end of this quarter and was expected to improve Shin Kong Bank's (新光銀行) capital adequacy ratio to 11.84 percent, according to the filing.

Shin Kong Financial expects its banking arm to rake in NT$8 million in the fourth quarter and another NT$161 million next year as a result of the fund injection, it said.

The capital came from the funds the company raised through the issuance of US$250 million of European convertible bonds last December, which was earmarked for acquisition purposes, the company said.

The company may use the funds to help refinance high-cost debt incurred in last year's acquisition of Macoto Bank (誠泰銀行), a privately owned lender, Victor Hsu (許澎), chief financial officer of Shin Kong Financial, said on March 29.

However, the financial group was later forced to change the declared purpose of the funds as a result of the staggered consolidation of the nation's financial sector following protests from unions linked to state-run lenders such as Taiwan Business Bank (台灣企銀), the company said in the statement.

Shin Kong Financial said it planned to use the remaining NT$4.57 billion to acquire rivals such as MasterLink Securities Corp (元富證券). The company said on July 4 that it planned to buy as much as 16 percent of Masterlink Securities within a year to expand its securities business.

Shin Kong said it would acquire MasterLink shares on the open market and the two companies reportedly expressed strong interest in a partnership after the chairman of Shin Kong Financial, Eugene Wu (吳東進), met with his counterpart Chen Wen-feng (陳文鋒) earlier this week.

Shin Kong Financial reported earnings of NT$5.88 billion, or NT$1.36 per share, for the first half of this year. Shares of Shin Kong dropped 1.8 percent to close at NT$18.7 yesterday.