Domestic financial institutions have thrown thier support behind a campaign to boycott Ting Hsin International Group (頂新集團) by freezing credit to the food maker and its affiliates, but plan to leave outstanding loans intact, bank executives said yesterday.
The move came after Financial Supervisory Commission (FSC) Chairman William Tseng (曾銘宗) on Monday suggested that banks might withhold credit from Ting Hsin in support of the Equator Principles.
The principles are a credit risk management framework adopted by financial institutions worldwide for determining, assessing and managing environmental and social risk in financing projects.
As of June last year, 79 financial institutions in 35 countries had officially adopted the principles, covering over 70 percent of international project finance debt in emerging markets.
“Ting Hsin deserves punishment for repeatedly deceiving the public by producing tainted oil,” Bank of Taiwan (臺灣銀行) chairwoman Lee Jih-chu (李紀珠) told reporters on the sidelines of a public function yesterday.
The Ministry of Finance yesterday said the nation’s eight major state-run banks have about NT$2.1 billion in outstanding loans to more than 30 foreign or domestic companies under Ting Hsin International Group, including Wei Chuan Foods Corp (味全食品), and the Wei (魏) family.
The ministry has requested eight major state-run banks to review their loans to the group.
Local media yesterday reported that Ting Hsin is considering selling its entire 40.4 percent stake in Wei Chuan and allowing a new management team to take charge, as a share sale would prevent Wei Chuan from going under amid a widespread consumer boycott of its products, according to local media.
Lee, also head of the Bankers Association of the ROC (銀行公會), said Bank of Taiwan has NT$200 million in outstanding loans to Ting Hsin and might take action against the food company, if necessary.
The state-owned lender would stop selling Ting Hsin products at its canteen, she said.
CTBC Bank (中信銀行), the main subsidiary of CTBC Financial Holding Co (中信金控), has NT$1.9 billion in outstanding loans to Ting Hsin operations in Taiwan and China.
The company plans to closely monitor the food scandal, senior vice president Rachael Kao (高麗雪) said.
“We will not approve new loans ,but have to honor contract terms for existing loans,” Kao said.
CTBC Bank is not set to make extra provisions for Ting Hsin loans, as the company has paid interest regularly and proven financially healthy, she said.
However, state-run Hua Nan Commercial Bank (華南銀行) has frozen credit for Ting Hsin that has taken loans of NT$60 million to NT$70 million, bank president Bruce Yang (楊豐彥) said by telephone.
Hua Nan previously agreed to grant Ting Hsin credit of up to NT$100 million, but is now withholding the remaining credit over concerns that the food manufacturer has repeatedly failed to carry out its social responsibility, Yang said.
Meanwhile, state-run lenders First Commercial Bank (第一銀行) and Taiwan Cooperative Bank (合庫銀行) said they also plan to uphold the Equator Principles and reject dealing with companies engaged in activities that might harm food safety and environmental protection.
Ting Hsin cannot be seen as an ethical corporate client having produced tainted oil for human use, according to the two lenders.
Additional reporting by Amy Su
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