The Financial Supervisory Commission yesterday heavily fined two local lenders for their poor internal control over managing their unsecured consumer lending businesses.
King's Town Bank (京城商銀), which is the successor to Tainan Business Bank (台南企銀), was fined NT$5 million (US$152,000), according to the commission.
The bank was penalized for its loose control over its subsidiary marketing firm, which distributes and sells the bank's unsecured consumer loan products designed specifically for military servicemen, the commission said in a press briefing.
The outsourced marketing unit of King's Town was accused of providing 31 fake applications and defrauding the lender of more than NT$30 million, the commission said.
No improvement
Taitung Business Bank (
The lender, which is ridden with bad loans, is on the government's watch list and posted a bad debt ratio of 22.83 percent. Its net worth shrank to only NT$89 million in July.
"We have demanded the bank bring up a plan for practical fundraising or a merger plan as soon as possible," commission spokesperson Susan Chang (
The commission said it is closely watching the Taitung Business Bank and is counting down to the deadline, according to Chang.
But another problematic lender -- Enterprise Bank of Hualien -- (
The small lender is expected to soon put forth a restructuring plan that would attract "enough foreign investment to turn its negative net worth at minus NT$1.8 billion into positive territory by 2008," Chang said.
Foreign suitors
She didn't elaborate more on the foreign investment front, but said the bank has briefed Nassau Inn Investments Limited and several investors from Malaysia on its business operations and future prospects.
Problematic banks on the financial regulator's watch list that fail to clean up their ledgers will be taken over by the government's financial restructuring fund and their current management team will be replaced, according to the commission.
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