Cosmos Bank (萬泰銀行), the nation’s largest issuer of debit cards, appears to have emerged from a loan default unscathed after Taiwan Ratings Corp (中華信評) reaffirmed its credit ratings despite a steep increase in nonperforming lending.
Shares in the bank ended steady at NT$7.15 on Friday, bucking the TAIEX’s 1.4 percent fall, one day after the Financial Supervisory Commission (FSC) indicated that the lender’s bad loan ratio surged to 3.55 percent in June, from 1.36 percent in May.
That makes Cosmos Bank the only lender with a non--performing loan (NPL) ratio above the 2 percent mark among 37 domestic banks. Based on the commission’s data, the average NPL of the 37 banks fell to 0.48 percent in June from 0.5 percent in May, as the total of bad loans dropped by NT$3.9 billion (US$140 million) from a month earlier to NT$99.5 billion.
Chang Kuo-ming (張國銘), deputy director-general of the commission’s Banking Bureau, said Cosmos Bank faced a bad loan of NT$1.6 billion to the cash-strapped Prince Motor Group (太子汽車) as part of secured lending valued at NT$5.6 billion.
Prince Motor is the local sales agent of Japan’s Suzuki Motor Corp. The company’s chairman, Hsu Sheng-fa (許勝發), is also the founder and former chairman of Cosmos Bank, but relinquished control after selling a combined 80 percent stake to US private equity firm SAC Private Capital Group LLC and GE Money, a unit of General Electric Co, in September 2007.
Prince Motor failed to honor payments in June on a NT$20 billion loan to 30 banks, according to the commission.
Cosmos Bank’s exposure to Prince Motor has not affected its credit profile as Taiwan Ratings, the local arm of Standard & Poor’s, on Friday maintained its “twBBB-” long-term and “twA-3” short-term counterparty credit ratings on the lender.
“Our assessment of Cosmos Bank’s credit profile already factors in the substandard loans and potential credit costs from the bank’s exposure [linked to Prince Motor],” Taiwan Ratings said in a statement.
The ratings agency viewed the bank’s asset quality to be below the domestic industry average as a result of its focus on unsecured consumer lending as well as its substandard loans, the statement said.
As of June, Cosmos Bank had a capital adequacy ratio of 16.02 percent. However, the bank is expected to auction off a plot of land that belongs to Prince Motor in New Taipei City’s (新北市) Tucheng District (土城) worth NT$4.2 billion, which will help lower its bad loan ratio.
The carmaker has filed for permission to convert the plot into a site for commercial and residential properties, thus making it more attractive to potential buyers, local media said.
Cosmos Bank expects to recover the loan fully as it also plans to ask Prince Motor to place a 17-story office building in downtown Taipei back on the market after the previous auction fell through last week.
The building on a 542-ping (1,792m2) plot of land near the intersection of Xinyi Road and Dunhua S Road failed to draw bidders due to development limits, auction organizer DTZ said.
Taiwan’s long-term economic competitiveness will hinge not only on national champions like Taiwan Semiconductor Manufacturing Co. (TSMC, 台積電) but also on the widespread adoption of artificial intelligence (AI) and other emerging technologies, a US-based scholar has said. At a lecture in Taipei on Tuesday, Jeffrey Ding, assistant professor of political science at the George Washington University and author of "Technology and the Rise of Great Powers," argued that historical experience shows that general-purpose technologies (GPTs) — such as electricity, computers and now AI — shape long-term economic advantages through their diffusion across the broader economy. "What really matters is not who pioneers
In a high-security Shenzhen laboratory, Chinese scientists have built what Washington has spent years trying to prevent: a prototype of a machine capable of producing the cutting-edge semiconductor chips that power artificial intelligence (AI), smartphones and weapons central to Western military dominance, Reuters has learned. Completed early this year and undergoing testing, the prototype fills nearly an entire factory floor. It was built by a team of former engineers from Dutch semiconductor giant ASML who reverse-engineered the company’s extreme ultraviolet lithography (EUV) machines, according to two people with knowledge of the project. EUV machines sit at the heart of a technological Cold
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) last week recorded an increase in the number of shareholders to the highest in almost eight months, despite its share price falling 3.38 percent from the previous week, Taiwan Stock Exchange data released on Saturday showed. As of Friday, TSMC had 1.88 million shareholders, the most since the week of April 25 and an increase of 31,870 from the previous week, the data showed. The number of shareholders jumped despite a drop of NT$50 (US$1.59), or 3.38 percent, in TSMC’s share price from a week earlier to NT$1,430, as investors took profits from their earlier gains
TAIWAN VALUE CHAIN: Foxtron is to fully own Luxgen following the transaction and it plans to launch a new electric model, the Foxtron Bria, in Taiwan next year Yulon Motor Co (裕隆汽車) yesterday said that its board of directors approved the disposal of its electric vehicle (EV) unit, Luxgen Motor Co (納智捷汽車), to Foxtron Vehicle Technologies Co (鴻華先進) for NT$787.6 million (US$24.98 million). Foxtron, a half-half joint venture between Yulon affiliate Hua-Chuang Automobile Information Technical Center Co (華創車電) and Hon Hai Precision Industry Co (鴻海精密), expects to wrap up the deal in the first quarter of next year. Foxtron would fully own Luxgen following the transaction, including five car distributing companies, outlets and all employees. The deal is subject to the approval of the Fair Trade Commission, Foxtron said. “Foxtron will be
RSS