The Bank of Overseas Chinese (
Last week, the Bank of Overseas Chinese filed a NT$10 billion suit against the China Times Group (
Day alleges that the Bank of Kaohsiung and the newspaper conspired together to trigger last week's bank run on the BOC in an attempted takeover.
"Bank of Kaohsiung chairman Chen Cheng-long (陳建隆) has repeatedly told the media recently that the BOK is going to take control of the BOC in similar fashion to the takeover of the Hung Fu (宏福) Life Insurance Company," Day said yesterday during testimony on the bank run at Legislative Yuan. "This has done damage to the BOC's reputation."
After the Asian financial crisis almost brought Hung Fu to its knees, the insurance provider was later taken over by other financial institutions.
Day said there was reason to believe that the Bank of Kaohsiung had colluded with the Commercial Times (
"After the newspaper printed a front-page story last Wednesday that the Ministry of Finance (MOF) was looking for a suitable bank to take over the BOC, finance ministry officials immediately clarified that the news was strictly a rumor," Day said. "Yet last Friday, the BOK's Chen told the media that he knew on May 20 that the BOC was going to have trouble."
Day said that because nobody knew before last Wednesday that there would be a run on the Bank of Overseas Chinese -- including regulators -- Chen had already anticipated the bank crisis.
"After the media reported on the BOC, Chen repeatedly said the BOK will take over the BOC using the Hung Fu model," Day said.
After the Bank of Overseas Chinese completes information gathering in the case, it plans to sue both Chen and the Bank of Kaohsiung, Day said.
Day is asking for NT$5.2 billion in indemnity from the BOK. Last week's lawsuit against the China Times Group asked for NT$10 billion to cover damages to the BOC's reputation resulting from the bank run.
"Total indemnity is NT$15.2 billion, which is the current net worth of the BOC," Day said.
After Day said he planned to sue the Bank of Kaohsiung, senior MOF officials said the ministry would not become involved with the suit.
"If both parties can be sincere in settling this matter, a lawsuit could be avoided," said Cheng Chung (
After learning of the possible suit, executives from the Bank of Kaohsiung said the emotional reaction of BOC officials was due to their personal holdings in the bank and potential substantial losses.
However, Bank of Kaohsiung executives indicated they still wished to cooperate with the Bank of Overseas Chinese in a takeover.
BOK executives said that they had already heard about the BOC's plight before May 20 and that they had been discussing possibly stepping in to take over the BOC's board.
Although the capitalization of BOK is just NT$4.4 billion, establishing a strategic alliance with the Bank of Overseas Chinese was a possibility, executives said.
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