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SinoPac predicts return to black

SinoPac Financial Holdings Co (永豐金控) chairman Ho Show-chuan (何壽川) pledged yesterday to pull the company out of the red in the second half of this year.

“After recovering from sub-prime-related investment losses, [SinoPac] is likely to return to profit in the second half of this year,” Ho, who is also chairman of Yuen Foong Yu Paper Manufacturing Co (永豐餘造紙), told a shareholders’ meeting yesterday morning.

The top management at SinoPac Financial, including Ho and chief executive officer Paul Lo (盧正昕), who will retire from his post on June 16, came under fire at the meeting for losses incurred from the company’s US$350 million subprime-related investments.

Top officials opened the meeting by taking a bow and apologizing for finalizing a cash dividend of just NT$0.1267 per share and not maximizing the company’s value for shareholders.

Some shareholders called on Lo to shoulder responsibility by giving up his company pension annuity.

SinoPac Financial has booked losses for 92 percent of its US$350 million in structured investment vehicles (SIVs) and Lo assured shareholders that the remaining 8 percent of investments were under control, with the stop and reverse point in sight.

“The company’s subprime-related crisis should bottom out by the end of June,” Lo said.

Although SinoPac Financial’s securities businesses are turning a profit, it wrote off NT$5.8 billion (US$191.2 million) in investment losses for last year and reported NT$2.45 billion in after-tax profits, constituting NT$0.36 earnings per share, he said.

The company fell farther into the red after suffering another NT$4.125 billion in losses from subprime-related investments early this year, Lo said.

The shareholders meeting voted to reshuffle the company’s 10-member board, with Ho still controlling seven board seats. Lo will stay on as a board member at SinoPac Financial.

Unsubstantiated media reports have said that SinoPac Financial plans to hire former Mega Financial Holding Co (兆豐金控) president Mckinney Tsai (蔡友才) as CEO at a June 16 board meeting to review and approve the appointment.

SinoPac Financial spokesman Richard Chang (張立荃) declined yesterday comment on the speculation, saying only that the company chairman would reveal the new CEO after the board meeting.

SinoPac Financial shares fell NT$0.35 yesterday to close at NT$14.15 per share.

The company’s stock has risen 16.5 percent so far this year, compared with the TAIEX’s 2.81 percent jump over the same period.
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