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Cosmos forced to withdraw capital cutting application

The Securities and Futures Bureau required Cosmos Bank (萬泰銀行), the nation's biggest cash-card issuer, to withdraw its capital reduction application yesterday because it failed to submit complete documentation.

The bank failed in its application to reduce capital by NT$5.9 billion (US$176.7 million) and withdrew the application, the bureau said.

The bank will be allowed to submit the application again, the bureau said.

Cosmos, which reported a loss of NT$11.28 billion last year and an unamortized loss of more than NT$29 billion from the sale of bad loans, said it planned to recapitalize by cutting capital and raising NT$21.2 billion of funds by the end of the third quarter to improve its weak financial structure.

Meanwhile, Chinese-language Next Magazine reported yesterday that the debt-ridden bank may have been involved in insider trading before announcing a huge loss on April 27.

After possible abnormal Cosmos stock transactions at the end of last month, the Financial Supervisory Commission is investigating and has not yet handed over the case to the prosecutors, Susan Chang (張秀蓮), spokesperson for commission, said on USTV yesterday.

Cosmos insiders are suspected of dumping a large amount of shares before the loss announcement was made.

Daily trading volume of Cosmos shares soared five times to 5.28 million shares in late March when the share price was more than NT$12, compared to a previous average of 1 million shares per day, Next Magazine said.

Cosmos shares closed down 4.69 percent to NT$6.3 yesterday, representing a plunge of 44 percent after the loss announcement.

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