Edgy depositors continue run

The run on troubled Chung Shing Bank (中興銀行) continued yesterday as depositors withdrew a further NT$4.2 billion from the bank, while investigators searched the residences of officials allegedly involved in the scandal and brought others in for questioning.

The Investigation Bureau (調查局) issued six search warrants for bank officials and representatives of the Taiwan Pineapple Corp (台鳳) yesterday after investigators allegedly discovered documents　regarding loans extended to Taiwan Pineapple were missing from one of the bank's branch offices.

Special economic crime investigators with the Taipei District Prosecutors' Office (台北地檢署) were dispatched to the residences of Wang Shuen-ren (王宣仁), president of Chung Shing Bank, and Huang Tsung-hung (黃宗宏), chairman of Taiwan Pineapple.

Investigators said they would decide whether to detain any of those suspected of involvement after questioning, but confirmed they had already barred five people involved in the scandal from leaving the country.

A team of seven regulators from the Central Deposit Insurance Corporation (中央存保公司) took control of the bank on Friday and suspended the board of directors after discovering alleged violations of lending regulations. Regulators yesterday said they will retain control over the bank for the next six months until a new management team is formed.

An official from the Ministry of Finance (MOF) yesterday stated that the bank had violated banking procedures earlier this year involving three loans to Taiwan Pineapple worth a total of NT$840 million.

The MOF also charged that the bank violated a rule preventing banks from loaning more than 40 percent of their net worth to a single customer. The bank's net worth has dropped since early this year, pushing the bank's significant loans to Taiwan Pineapple over the legal limit.

According to an investigation by the MOF, Chung Shing Bank is Taiwan Pineapple's largest creditor, with NT$6.2 billion in loans extended to the company, out of a total of NT$15 billion in Taiwan Pineapple's outstanding domestic loans.

Crowds of worried depositors began to gather outside of six bank branches in Kaohsiung early yesterday morning to withdraw funds.

Depositors have removed NT$18.2 billion from the bank over the past four days.

Before the bank opened for business yesterday, bank officials called for calm, claiming to have an additional NT$20 billion in cash on hand.

On Friday, the Ministry of Finance asked 15 banks and bill companies to purchase NT$100.5 billion in certificates of deposit from the bank to ease pressure from sudden withdrawals.

Acting bank president Chien Wan-san (簡萬三) yesterday pleaded for confidence from depositors and investors in the bank, denying rumors the bank had covered up bad loans and stating that the bank's fundamentals were still good.