Auction of Chinese Bank canceled

The government auction of The Chinese Bank (中華銀行) has been canceled, as no bidders had sent in applications by yesterday's noon deadline, the Central Deposit Insurance Corp (CDIC, 中央存保) said.

"The sale has failed even before it started," CDIC President Johnson Chen (陳戰勝) said in a telephone interview yesterday. "We hope to resume the auction of the bank by the end of this year."

The deadline for applications had been postponed several times from 5pm on Tuesday.

The auction of the troubled lender's branch network slated for next Tuesday, through which interested buyers are supposed to tender their offers, has been scrapped, Chen said.

However, sale of the bank's bad loans assets will take place as planned, as three packages of bad loans have attracted four to five bidders each, he said.

The CDIC successfully sold the Enterprise Bank of Hualien (花蓮企銀) to Chinatrust Commercial Bank (中國信託商銀) in May and Taitung Business Bank (台東企銀) to ABN AMRO Bank NV last month after having taken over the debt-ridden lenders six months prior to their sales.

"The auction has failed because bidders have been deterred by thorny issues such as unresolved hidden lending to collapsed parent group members and a huge personnel burden, with staff numbering over 2,400," Chen said.

Chen said that four financial institutions, including one or two foreign banks, had conducted due diligence of The Chinese Bank, although he declined to name them.

HSBC Ltd, which has been left behind its overseas rivals in Taiwan in this round of the expansion race, and Fuhwa Financial Holding Co (復華金控), which has sought to expand its banking unit, may be among the interested buyers.

The Chinese Bank, which runs 36 outlets nationwide, was taken over in January following the collapse of parent Rebar Asia Pacific Group (力霸亞太企業集團) after two of the group affiliates filed for insolvency protection, causing a domino effect, which spread to its other members.

Despite the setback, the CDIC will proceed with its auction of another troubled lender, China United Trust and Investment Corp (中聯信託), which was taken over by the CDIC at the end of March, by allowing interested bidders to undertake due diligence on August 6, Chen said.

The lender is to be split into four parts for auction in early September: a franchise network and good assets of deposit and active outstanding loans; bad loans assets; a 15 percent stake in Taipei Financial Center Corp (台北金融大樓公司), the operator of Taipei 101; and over 30 parcels of real estate pledges, he said.

A number of interested buyers have made inquiries, especially concerning China United Trust's stake in the Taipei 101 operator, and the company is confident the sale will go smoothly, Chen said.