Sat, May 12, 2007 - Page 12 News List

Cosmos Bank says local and overseas investors secured

REFINANCING The bank has to address a loss from the sale of bad loans, but is confident of meeting the regulator's fund injection deadline

By Amber Chung  /  STAFF REPORTER

The cash-strapped Cosmos Bank (萬泰銀行), the nation's biggest cash card issuer, said yesterday that it has secured both local and overseas investors to help relieve its financial difficulty, after the financial regulator demanded a fund injection of at least NT$5 billion (US$150 million) by the end of next month.

"Our fundraising plan is progressing smoothly," Cosmos spokesman Shih Kung-liang (施坤良) said in a telephone interview yesterday.

Fresh capital will come from both local and foreign investors, Shih said, declining to give more details and citing confidentiality agreements.

The debt-ridden bank announced last month a large-scale recapitalization plan to raise a total of NT$21.2 billion by the end of the third quarter to bolster its weakened financial structure following the consumer credit abuse storm last year.

Cosmos reported a loss of NT$11.28 billion last year. It has to address an unamortized loss exceeding NT$29 billion from the sale of bad loans.

Shih said the bank is confident of meeting the Financial Supervisory Commission's deadline.

As GE Consumer Financial, Cosmos' single largest shareholder with a 10 percent stake, remained mum on their participation in the fundraising plan, the intentions of Shin Kong Life Insurance Co (新光人壽), the bank's second largest shareholder with more than a 5 percent holding, attracted the market's attention.

Shin Kong Life's chairman Eugene Wu (吳東進) is the son-in-law of Hsu Sheng-fa (許勝發), the founder and chairman of Cosmos.

Wu was seen by the Taipei Times meeting with Gary Kuo (郭冠群), chairman of Morgan Stanley Taiwan Ltd, the financial advisor of Cosmos' fundraising plan, at a restaurant on Thursday night.

"We were just having a chat," Kuo said in a telephone interview with the Taipei Times yesterday.

Kuo declined to discuss whether Shin Kong would financially aid Cosmos and the current progress of the fundraising, saying that he is not in a position to comment due to a confidentiality agreement.

"This is a too sensitive a time for us to comment on anything to do with Cosmos," Victor Hsu (許澎), spokesman of parent company Shin Kong Financial Holding Co (新光金控), said by telephone.

Hsu said it was normal for Shin Kong to maintain close contact with Kuo because Morgan Stanley had offered financial advisory services to the bank on an array of deals in recent years, including Shin Kong's takeover of Macoto Bank (誠泰銀行) in April 2005 and Shin Kong's strategic investment in MasterLink Securities Co (元富證券) last July.

On Tuesday, Hsu told investors that the company would "comply with corporate governance rules" over its stake in Cosmos.

The company would obtain board directors' approval beforehand if it should wish to increase its holding in the lender, Hsu said.

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