After two failed bids, the Central Deposit Insurance Corp (CDIC, 中央存保) yesterday auctioned off debt-ridden Chinfon Commercial Bank’s (慶豐銀行) assets, liabilities and operations, including its 37 branches — the so-called “good bank” part of the firm — to four domestic banks for a total of NT$31.7 billion (US$975.3 million). CDIC will pay some of the buyers to complete the deal.
CDIC will pay Yuanta Commercial Bank (元大商銀) and Far Eastern International Bank (遠東商銀) NT$19.3 billion and NT$19.003 billion respectively for taking up 37 outlets nationwide, CDIC president Howard Wang (王南華) told a press briefing, adding that eight banks had submitted bids. Yuanta will take 18 outlets and Far Eastern will take 19.
Taishin International Bank (台新銀行) will pay CDIC NT$4.1 billion to acquire Chinfon’s credit card receivables, with a total balance of around NT$4 billion, while Taipei Fubon Bank (台北富邦銀行) agreed to buy two of Chinfon’s Vietnam-based branches for NT$2.53 billion, Wang said.
He said he was happy with the auction results. He refused, however, to disclose the average premium for the four deals, saying only that it was “more than 10 percent.”
Chinfon still owns several properties, including its Taipei headquarters and another office building on Dunhua North Rd, which CDIC estimates are worth a total of NT$8 billion, he said, and the insurer will put them up for sale in four or five months.
Yesterday’s winning banks had agreed to retain half of Chinfon’s 1,000 or so employees on their regular payrolls for a minimum of one year, Wang said.
Jonathan Lee (李信佳), senior director of financial institutions group at Fitch Ratings Ltd Taiwan branch, called the deals “inexpensive” for Yuanta and Far Eastern because market sentiment had improved.
Once the deals go through, Yuanta will have a total of 87 outlets, while Far Eastern’s branches will increase from 35 to 54.
Taxpayers can rest assured that Chinfon’s losses will not grow, Lee said.
The sale of Chinfon’s Vietnamese branches should facilitate Taipei Fubon’s expansion into Vietnam to serve Taiwanese businesses there, Lee said.
Taipei Fubon said in a statement yesterday that Chinfon’s two Vietnamese branches had a total of US$170 million in assets. Taipei Fubon has a branch and a liaison office in that country.
Taishin said in a separate statement that it will become the nation’s third-largest credit card issuer, up from the No. 6 spot, after the receivable deal adds 690,000 cardholders to its existing 2.2 million client base.
Lin Tung-liang (林棟樑), deputy director of the Financial Supervisory Commission’s banking bureau, said after excluding gains, the government is expected to pay out a total of NT$17.2 billion on the liquidation of Chinfon after seizing control of the bank in September last year.
The CDIC and the Financial Restructuring Fund have spent some NT$276.4 billion on the bailout of a total of 55 failed banks, not including Chinfon, Lin said.
The latest FSC statistics showed that Chinfon had NT$19.04 billion in net losses as of August, with a 14.78 percent non-performing debt ratio and NT$3.4 billion in bad loans.
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