The Financial Supervisory Comm-ission announced yesterday that it had taken over debt-ridden Taitung Business Bank (台東企銀), reinforcing the government's efforts to restore the nation's financial health.
The commission designated Central Deposit Insurance Corp (
But the financial regulator said the Taitung bank's daily operations -- including accepting deposits and remittances -- would be allowed to continue as usual and reassured bank customers that all NT$48.47 billion (US$1.49 billion) of the bank's deposits were 100-percent secured.
"The lender has failed to complete its self-bailout program for several times as required," the commission's chairman Shih Jun-ji (
"We made the decision as we feared that the bank would become too insolvent to be dealt with, considering its widening losses," Shih added.
As of last month, Taitung Business Bank had a negative net worth of NT$1.09 billion. The figure soars to negative NT$2.47 billion after including NT$1.39 billion of losses incurred from the sale of bad debts, the commission's data showed.
The bank's defaulted loans amounted to NT$8.39 billion, or equivalent to a bad loan ratio of 23.01 percent, the data revealed.
Shih said the regulator is well prepared with abundant reserves of over NT$50 billion supplied by the government's financial restructuring fund and central deposit insurance fund to handle any bank run.
Meanwhile, over 10 past and present board directors and executives of Taitung Business Bank have been banned from leaving the country with their money and assets frozen, the commission said.
The prosecutors have been investigating possible illegal loans the bank has made, it added.
Taitung Business Bank is the third bank to be taken over by the regulator after Chung Hsin Bank (中興銀行) in 2001 and Kaohsiung Business Bank (高雄企銀) in 2002.
The bank said earlier that it had been in talks with several interested foreign investors.
Yet there were no actual fund injections into the bank over the three-month-long extension after the deadline for self-help expired at the end of August.
The Financial Supervisory Commission said yesterday that it will auction off Taitung Business Bank in five months after hiring financial advisers to evaluate the bank's debts and assets. But it may need to pay NT$2 billion to NT$3 billion to cover the widening deficits before the buyer takes over, the commission added.
To attract as many interested bidders as possible, the commission will allow the bid winner to freely move a certain proportion of Taitung Business Bank's 31 branches which mostly are located in the south and east of Taiwan.
Currently, six problematic financial institutions remain on the regulator's blacklist for possible takeover, including Enterprise Bank of Hualien (花蓮企銀), Bowa Bank (寶華銀行) and Chinese Bank (中華銀行). Among them, Enterprise Bank had a negative net worth of NT$2.52 billion as of October, the commission's data showed.
Banks that see a negative net value are most likely takeover targets, said Gary Tseng (
The nation's financial regulator has vowed to crack down financial irregularities and restore market order lately and has imposed heavy penalties on several financial institutions.
These penalties include a fine of NT$10 million meted out to China Development Industrial Bank (
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