Shareholders of EnTie Commercial Bank (安泰商業銀行) agreed yesterday to the bank's plan to sell 1.2 billion new shares for NT$12 billion (US$364 million) on the open market, in a bid to strengthen its financial structure.
The fundraising plan was to be carried out in two phases, with the first batch of funds to be injected into the bank from existing shareholders and employees in June, EnTie chairman Paul Chiu (
The amount of the first-stage fund injection will be determined in a board meeting slated for March 19. The fundraising will increase the bank's paid-in capital to NT$32 billion.
EnTie changed its original plan to raise fresh funds via a private placement to interested foreign investors, reportedly including Orix Group, Japan's largest non-bank financing company.
"We were in talks with some interested investors but have not been able to reach any deal," Chiu said.
The bank is considering including strategic partners in the second-stage fundraising activity, targeting financial institutions of know-how rather than private equity funds.
"But the bank's major shareholder will not give up management," Chiu said.
Lin Yu-lin (
The legislature on Monday approved an amendment to the banking law requiring that banks whose loss exceed one-third of paid-in capital raise new capital to improve their financial structure, or face government takeover.
Chiu said they hoped the fresh capital would lower the bad loan ratio and enable the capital adequacy ratio to meet the regulatory 8 percent.
EnTie had a capital adequacy ratio of 9.41 percent at the end of the third quarter last year, down from 10.21 percent in the previous quarter, according to the central bank's data.
As of January, the bank's bad loan ratio rose to 5.5 percent from 4.87 percent a month earlier, the Financial Supervisory Commis-sion's data showed.
The bank is experiencing financial difficulties since it reported a deficit of NT$5 billion last year, coupled with credit lending losses of NT$12 billion that have yet to be amortized and the implementation of Basel II reporting that gauges banks' capital adequacy.
Rival Cosmos Bank (萬泰銀行), the nation's biggest cash card issuer, also planned to raise up to NT$9 billion in funds and introduce its second large foreign shareholder in addition to GE Capital Taiwan Holdings Inc, which controls a 24.9 percent stake in the lender, a report said yesterday.
The bank planned to approve the fundraising program in a board meeting on March 22, the Chinese-language Economic Daily News reported.
Cosmos spokesman Shih Kung-liang (施坤良) said yesterday that the bank was considering the fund-raising plan but he declined to elaborate.
Cosmos incurred a loss of NT$7.82 billion last year, with its bad loan ratio rising to 3.29 percent in January from 2.88 percent at the end of last year.