Tue, Jul 10, 2007 - Page 11 News List

General Electric may boost Cosmos Bank's capital


General Electric Co is among a group of companies that may invest a combined NT$27.3 billion (US$831.4 million) in Cosmos Bank Taiwan (萬泰銀行) to help replenish its capital, said Susan Chang (張秀蓮), vice chairwoman of the financial watchdog.

"Based on what we have seen, the progress has been pretty positive," Chang said in a phone interview from Basel, Switzerland. "They plan to finish the recapitalization by September as originally scheduled, but we hope they will get it done sooner."

Chang declined to identify the other investors.

Taipei-based Cosmos, 10 percent owned by GE's consumer lending unit, was among Taiwanese credit card and cash card issuers hurt by a surge in loan defaults in the past two years. It posted a pretax loss of NT$2.38 billion in the four months ended April 30, according to the Financial Supervisory Commission (FSC).

"The capital injection will certainly help Cosmos stay afloat," said Steven Chen (陳智誠), an analyst at Taiwan Ratings Corp (中華信評). "Essentially, how this will help turn around Cosmos' operations will depend on GE's strategy."

Cosmos' capital adequacy fell to 7.51 percent on March 31 from 9.36 percent three months earlier, below the banking industry's 10.1 percent average, FSC data shows.

The company in April said the planned fundraising will probably boost its capital adequacy ratio to at least 12 percent. In January last year, GE Consumer Finance said it would pay US$86 million for 10 percent of Cosmos, and may raise the holding to 24.9 percent later through the purchase of convertible bonds.

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