Tue, Jan 09, 2007 - Page 3 News List

Financial regulator says no systemic risk of bank runs

STAFF WRITER , WITH CNA

Workers at The Chinese Bank in Taipei stand next to large stacks of cash yesterday in anticipation of customer withdrawals during the bank's first day of operation after being taken over by the Central Deposit Insurance Corp.

PHOTO: LUO PEI-DER, TAIPEI TIMES

The nation's top financial regulator yesterday said that the crowds of people withdrawing money from The Chinese Bank had gradually dispersed shortly before noon yesterday.

Financial Supervisory Commission (FSC) Chairman Shih Jun-ji (施俊吉) said there were no systemic reasons to worry about an increase in bank runs

He again told depositors of The Chinese Bank, owned by the financially troubled Rebar Asia Pacific Group, that they had no need to worry, as "every penny of their money will be assured by the national coffers."

FSC tallies show that clients withdrew a total of NT$15 billion (US$462 million) from the bank on Friday.

The bank run on Friday was set off after the Taipei District Court on Thursday approved a restructuring request by China Rebar Co and Chia Hsin Food and Synthetic Fiber Co -- two subsidiary companies of Rebar Asia Pacific Group -- which became insolvent after suffering losses totaling NT$25.2 billion over the past seven years.

China Rebar is a large Tai-wanese corporation involved in a wide range of businesses, including textiles, construction, hotels, real estate, retail, services, insurance, banking and media. Together, the company and Chia Hsin Food employ more than 3,400 people.

To assure the depositors, the FSC had the Central Deposit Insurance Corp take over The Chinese Bank.

It also asked Taiwan Cooperative Bank and Cathay United Bank to jointly take over the Rebar Group's 70-percent-owned stock brokerage firm, the Great Chinese Bills Finance Corp, in an attempt to nip in the bud any domino effect.

The Chinese Bank has 35 branches and as of the end of last year its deposits amounted to NT$169.71 billion, while loans totaled NT$124.66 billion, FSC statistics showed.

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