King’s Town Bank (京城銀行), which lent about NT$5 billion (US$161.97 million) to financially troubled Chunghwa Picture Tubes Ltd (中華映管) and Green Energy Technology Inc (綠能科技), yesterday assured investors that the loans would not turn sour as it has secured land and factory equipment as collateral.
However, the bank said in a statement that its board would next week discuss whether to recognize the NT$5 billion as a potential loss, but pledged to reclaim the debt.
The bank prefers to recognize the losses soon rather than letting any uncertainty linger, bank spokesman You Qi-wei (尤其偉) told the Taipei Times by telephone.
Asked about reclaiming the debt, You said: “To be honest, no one knows how long it will take, or how much we can get back.”
It would be difficult for the bank to sell the collateral once Chunghwa Picture Tubes receives the court approval, You added.
Although King’s Town Bank did not participate in a creditor meeting presided over by the Bank of Taiwan (台灣銀行) yesterday afternoon, the bank agrees with its peers that Chunghwa Picture Tubes should negotiate with lenders rather than getting court approval to restructure, You said.
The financial troubles of Chunghwa Picture Tubes and Green Energy Technology have caught the bank off guard.
“We did not see this coming” as both firms have made the interest payments on their debts, You said, adding that the bank has tried to communicate with the companies, but remains uninformed about the specifics of their financial problems.
King’s Town Bank has lent the two companies money over about four years.
As of last month, the bank had lent about NT$2 billion to Chunghwa Picture Tubes and NT$2.9 billion to Green Energy Technology, making them their biggest private creditor, it said.
Financial Supervisory Commission Chairman Wellington Koo (顧立雄) said at a meeting of the legislature’s Finance Committee yesterday that the commission would monitor the trading of shares for all subsidiaries of Tatung Co (大同), demanding full disclosure.
Democratic Progressive Party (DPP) Legislator Shih Yi-fang (施義芳) said Chunghwa Picture Tubes should be delisted from the local bourse due to poor financial performance.
The company was added to the exchange regulator’s watch list in 2011, Koo said.
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