The Central Depository Insurance Corp (CDIC,
Most of Chung Shing's impaired assets have been sold, so only the healthy parts of the bank's business are left to be auctioned, "which should be very attractive," a CDIC executive vice president said on condition of anonymity.
According to the CDIC, Chung Shing's interbank call loans, negotiable certificate of deposit (NCD) and certificate of deposit will be excluded from bidding at the upcoming auction, which means that "the government will later allocate a budget to settle the debts," the executive vice president said.
"Chung Shing's financial portfolio is now relatively transparent after the write-off of its bad loans under the CDIC's custody," said Marie Cheng (鄭瑪莉), managing director of the auction's financial consultant PriceWaterhouseCoopers.
"Between five to seven banks have expressed interest in placing bids," Cheng said, refusing to elaborate.
Some local banks, including Chinatrust Commercial Bank (
Chung Shing had been put up for auction unsuccessfully three times in the last few years.
According to local media reports, Chung Shing currently owns NT$59.7 billion in assets, with NT$53.3 billion in liabilities, which Cheng said was close to reality.
What makes the deal more attractive is Chung Shing's 47 branch licenses, including 12 branches that have been shut down, and two trust units.
To provide incentives, the CDIC will allow the buyer to relocate 17 of the bank's 34 branches anywhere it wishes. The remaining branches can be moved to new locations within the same city or county.
The buyer will also be entitled to re-open the bank's 12 closed branches anywhere in Taiwan within the next five years. It will also be able to upgrade the two trust units to fully-fledged branches within the next two years, the CDIC said.
The CDIC said the criteria for potential bidders were very flexible, allowing consortiums and banking units of all domestic or foreign financial-service companies with a minimum capital adequacy ratio of 8 percent and a minimum net worth of NT$10 billion (US$297 million) to take part in the auction.
Capital adequacy is a measure of a bank's financial strength, usually expressed as the ratio of its capital to its assets.
Financial holding companies which haven't yet establish banking units will also be qualified to bid, as long as they have NT$5 billion in reserves to use as the to-be-established banking units' working capital, while replenishing the remaining NT$5 billion within the next three years. The capital adequacy requirement for banking units of financial holding companies bidders, however, will be closer to 12 percent.
Qualified bidders will be given a period of three weeks next month to conduct a due diligence check, Cheng said.
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