TCB may sell new shares

Taiwan Cooperative Bank (合庫銀行), the nation's second-largest lender by assets, said it may sell new shares to the public to improve its capital adequacy ratio, after a newspaper reported that a proposed stake sale to BNP Paribas SA was halted by the Ministry of Finance.

"Selling new shares in a public offer is one of the options we are considering, but we haven't made a final decision," bank executive vice president Chen An-hsiung (陳安雄) said yesterday. He declined to elaborate on the other options.

Chen was responding to a report in the Chinese-language Liberty Times that said Taiwan Cooperative will sell NT$4 billion (US$122 million) worth of shares to the public given its inability to sell to BNP Paribas. The newspaper did not cite sources.

Through the new share sales, the bank said it expected to see its capital adequacy ratio increase to 10 percent, up from the 9.2 percent it has now.

Capital adequacy is a measure of a bank's financial strength and is usually expressed as the ratio of its capital to assets.

State-controlled Taiwan Cooperative earlier announced that it would seek foreign investment to cooperate with the government's plan to consolidate the nation's banking sector.

But the bank has repeatedly denied that BNP Paribas is the investor, and rejected the speculation that it may sell a 10-percent stake to the French financial institution.

The report said that after a year of intense discussion, BNP Paribas agreed to invested US$100 million to acquire an unspecified number of shares in Taiwan Cooperative via a private placement.

But the two later decided to drop the plan due to objections from the government, the report added.

According to sources at the finance ministry, Taiwan Cooperative's former plan to sell a 10-percent stake to BNP Paribas has been put on hold as the ministry is concerned about the method the bank chose to use for the share sale.

Since the government launched the second-stage of financial reform in 2004, lawmakers have strongly criticized its far-from-transparent methodology, accusing the ministry of benefiting certain conglomerates.

The two-day Conference on Sustaining Taiwan's Economic Development held in July also concluded that share sales of state-run financial institutions must be carried out through open, fair and transparent means.

"It now seems we won't proceed in seeking a foreign investor," Taiwan Cooperative's Chen said, declining to elaborate.

BNP Paribas, France's second-biggest bank by assets, is now collaborating with Taiwan Cooperative to sell insurance products in Taiwan.