FSC to talk about lifting penalties on Chinatrust Financial

The Financial Supervisory Commission (FSC) is scheduled to convene a meeting tomorrow to discuss if it is ready to ease bans on Chinatrust Financial Holding Co (中信金控) for poor internal controls during a controversial investment in larger rival Mega Financial Holding Co (兆豐金控).

"We will discuss reports of their improvement and decide whether, or under what conditions, to remove the restrictions on the company," Susan Chang (張秀蓮), the comission's spokeswoman, told reporters yesterday.

In July, the financial regulator meted out several punishments to Chinatrust Financial for investment irregularities. Apart from a fine of NT$10 million (US$305,500) on its banking unit, the penalties also include freezing the FSC's approval of Chinatrust Financial's plans to open overseas branches and fund-raising ventures -- which later led to the resignation of Chinatrust Commercial Bank (中國信託商銀) chairman Jeffrey Koo Jr (辜仲諒)

The FSC's conclusion will be crucial to Chinatrust Financial, as the holding company is reportedly mulling plans to raise funds from strategic foreign investors by the end of this year.

"We could give a nod to those fundraising plans meant to strengthen Chinatrust's financial structure, but possibly a `no' to those for acquisition purposes," Chang said.

Meanwhile, the commission confirmed that it has allowed Chinatrust Commercial's subsidiaries in the US and the Philippines to open new branches, pending approval from the financial authorities in those markets.