SinoPac Financial Holdings Co (永豐金控) is reviewing its lending operations to improve internal oversight after a spate of questionable loans led to heavy fines and a management reshuffle, senior executives said yesterday.
“We are re-examining credit applications to make sure they all meet regulatory requirements... The probe by the Financial Supervisory Commission will show if the company is guilty of compliance failure,” SinoPac Financial chief investment officer Eric Chuang (莊銘福) said on the sidelines of the inauguration of a new Bank SinoPac (永豐銀行) branch in Hualien.
The probe came after a tip-off from the group’s employees that affiliated SinoPac Leasing Corp (永豐金租賃) granted a US$1.35 million (NT$4.22 billion) loan to J&R Trading Co, a foreign shell company owned by Sun Power Development and Construction Co (三寶建設) and with investment from papermaking conglomerate YFY Inc (永豐餘控股) and E Ink Holdings Co (元太科技).
Both YFY and E Ink are affiliates of SinoPac Financial, raising ethical and legal concerns over the loan, especially in the absence of sufficient collateral, local media cited the employee as saying.
SinoPac Financial denied the accusation, saying the leasing unit secured equities and subordinate claims on real estate as collateral that are estimated to be worth 85 percent of the loan.
The borrower carried out the financing through a foreign company as is standard practice for Taiwanese firms based in China, SinoPac Financial said.
Unlike banks, leasing firms cannot demand the use of land as collateral in China and the group decided to classify the loan as “unsecured” to meet tighter standards, SinoPac Financial said.
“The company should emerge from the probe unscathed,” Chuang said.
Last month, Bank SinoPac, the main subsidiary of SinoPac Financial, incurred a fine of NT$10 million for loans paid to Taipei-based dentistry supplier Tingsing Trading Co (鼎興貿易).
The dentistry supplier allegedly bilked NT$3.78 billion from 13 lenders, including Bank SinoPac, because it is owned by an in-law of a former Bank SinoPac director, prosecutors said.
SinoPac Financial reshuffled its top management positions after the fine.
Acting Bank SinoPac president Philip Wei (魏哲弘), whose appointment is awaiting regulatory approval, said he and his colleagues are sorting out their connections because many people do not know their distant relatives, whose conduct could have legal implications in their profession.
Ho Shou-chuan (何壽川), the patriarch at SinoPac Financial, YFY, E Ink and other businesses, has adopted a strict approach to deal with family and friends, Wei said.
A review of all loans in excess of NT$100 million is being undertaken, officials said.
The Hualien branch is intended to deepen the lender’s presence in the east of the nation, where customers prefer traditional human contact to online transactions, Bank SinoPac said.
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