Fri, Aug 25, 2006 - Page 11 News List

Taishin Financial downgraded over ongoing bad loans

By Amber Chung  /  STAFF REPORTER

Taishin Financial Holding Co (台新金控), the nation's second-largest credit card issuer, needs another round of recapitalization to get rid of financial distress brought on by mounting consumer bad debts, BNP Paribas Securities (Taiwan) Co said in its latest report released yesterday.

The French securities house estimated Taishin Financial would need to raise funds of between NT$25 billion (US$761 million) and NT$35 billion, which translated into dilution of about 30 percent for existing shareholders, if the bankruptcy law is approved by lawmakers in the near future.

The personal bankruptcy bill is to be reviewed in the legislative session which starts next month.

The recent combined capital injection of NT$31 billion from Newbridge Capital Inc and Nomura Group appeared inadequate after Taishin Financial wrote off its banking unit's NT$27.4 billion of bad debts, the report read.

The company's call to amortize the losses stemming from the disposal of NT$9.5 billion in bad loans also reflected its tight capital adequacy position, it said.

BNP Paribas Securities downgraded ratings on Taishin Financial to "Reduce" from "Hold" and nearly halved its target share price to NT$13 from its previous NT$22.1.

The brokerage revised down its earnings forecast for the company by 186 percent to a net loss of NT$5.95 billion, or a loss of NT$1.05 per share, from profits of NT$12.56 billion, or NT$2.21 per share.

Meanwhile, Deutsche Securities retained its "neutral" ratings on Taishin Financial.

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