Sat, Jan 06, 2007 page12

• Hualien bank taken over

  • By Amber Chung / STAFF REPORTER
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  The Financial Supervisory Commission announced that it had taken over the debt-ridden Enterprise Bank of Hualien (花蓮企銀) yesterday.

  The financial regulator designated Central Deposit Insurance Corp (中央存保) to take over the bank at 3:30pm yesterday and immediately suspended all the powers of the lender's board, supervisors and the shareholders meeting, the commission said yesterday.

  The Enterprise Bank of Hualien is the second problematic bank to be taken over within the past three weeks.

  Taitung Business Bank (台東企銀) was taken over on Dec. 15, as the financial watchdog vowed to speed up its campaign to clean up the nation's troubled lenders.

  In a bid to maintain financial stability, the commission said the Hualien-based bank's daily operations -- including accepting deposits and remittances -- would continue as usual and reassured bank customers that all NT$28.59 billion (US$877 million) of the lender's deposits were 100-percent secured.

  "The lender has failed to complete its self-bailout program several times as was required and its financial structure had continued to deteriorate," Financial Supervisory Commission Chairman Shih Jun-ji (施俊吉) told a press conference yesterday.

  Interested foreign investors -- reportedly including the Kuala Lumpur-based Cam International Holdings Ltd -- abandoned their interest in the bank after the commission refused requests from the investors to relax regulations that the comission said would not improve the bank's financial stability.

  "The later we take over [the bank], the bigger the cost," Shih said.

  The bank has been experiencing monthly losses of up to NT$40 million, on top of a net worth as low as negative NT$7.78 billion and a bad loan ratio of 29.77 percent as of the end of November.

  Meanwhile, more than 10 past and present board directors of the Enterprise Bank of Hualien have been banned from leaving the country and have had their money and assets frozen, the commission said.

  It added that chairman Tan Tiong-hong (陳忠鴻) and a foreign supervisor who took up positions in March and April, respectively, were exceptions.

  The commission said that prosecutors were currently investigating suspected illegal loans and transactions.

  Another four debt-ridden lenders that remain on the commission's blacklist of problematic lenders, including Bowa Bank (寶華銀行), are also likely to be taken over if they could not complete self-help fundraising plans in time.

  Shih said that one of his New Year wishes was to speed up the handling of remaining problematic banks and those taken over this year to lower the cost of government funds worth more than NT$50 billion.

  He added that the commission may consider auctioning the Enterprise Bank of Hualien and Taitung Business Bank, with its 31 branches, as a package.

  The commission will closely monitor the remaining problematic banks on the list before any potential takeover, Shih added.
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