Few bidders for troubled Taitung Business Bank

Unlike last week, when Enterprise Bank of Hualien (花蓮企銀) was successfully auctioned off, the government yesterday failed to find a buyer for the financially fragile Taitung Business Bank (台東企銀) after more than seven hours of bidding.

The Central Depository Insurance Co (CDIC, 中央存保), which organized the sale, said the bidding process would continue today on an individual negotiation basis.

If no satisfactory offers were received today, the matter would be referred to the government's restructuring fund committee, CDIC president Johnson Chen (陳戰勝) told the Taipei Times by phone late last night.

For yesterday's auction, Taitung Business Bank was divided into two lots. The first consisted of the bank's 31 branches while the second was comprised of three batches of bad loan assets.

"Only one foreign bidder participated [in the bidding for the first lot] today [yesterday] and no agreement was reached after three rounds of bidding," Chen said.

He declined to name the bidder directly, but admitted that local media had correctly speculated on the prospective buyer's identity. Recent reports suggested that ABN AMRO Bank Taiwan was interested in acquiring troubled local banks, following in the footsteps of rivals Standard Chartered Bank and Citibank.

Meanwhile, the CDIC said that only two of Taitung Business Bank's bad loan assets were sold yesterday. One was secured by Orix Taiwan with an offer of NT$513 million (US$15.53 million) for a secured portfolio worth NT$5 billion, and the other went to asset management company Liang Jing (良京實業) which paid NT$241 million for an unsecured portfolio worth NT$4.29 billion.

Taitung Business Bank was taken over by the CDIC in December last year with a book value of minus NT$2.48 billion. The bank's value declined further to minus NT$4.1 billion as of April, government data showed.

As potential buyers showed limited interest in the sale, the CDIC said it would allow the successful bidder to relocate as many as 21 of Taitung Business Bank's branches within the next five years, without any geographical restrictions.

In comparison, the auction of the Hualien bank last Thursday attracted five interested buyers. Chinatrust Commercial Bank (中國信託商銀) won the bid with the lowest offer of NT$4.49 billion, which is the amount the CDIC needs to pay out to compensate the buyer for absorbing the debt-ridden bank.

Chinatrust Commercial is allowed to relocate 16 of the Hualien lender's branches in the next five years, without any geographical restrictions.