Bowa Bank (寶華銀行), one of the remaining four troubled lenders blacklisted by the financial regulator, announced yesterday its board had selected Herbert Chung (鍾甦生), chairman of Waterland Securities Co (國票證券), to take over at the helm.
The appointment is subject to approval by the Financial Supervisory Commission and is scheduled to take effect next Tuesday, the bank said in a filing to the GRETAI Securities Market yesterday.
Chung is to replace former chairman Kuo Cheng-chao (郭正昭) who quit last Friday, citing personal reasons.
Kuo's unexpected resignation sparked market concern over Bowa's weakening profitability and below-average asset quality. The resignation news led to a sell-off of the bank's shares on Monday -- the first trading day after the announcement.
Shares of Bowa closed up 6.97 percent at NT$2.15 yesterday.
The appointment of Chung, a seasoned banker, is expected to expedite the bank's self-help fundraising plan.
High credit costs
The lender saw its capitalization weaken significantly over the first three quarters of last year, mainly because of high credit costs arising from unsecured consumer lending and its failure to formulate a capital injection plan.
Bowa's BIS ratio dropped to only 6 percent at the end of June last year, below the regulatory minimum requirement of 8 percent. The ratio, also known as capital adequacy, is a measure of a bank's financial strength, usually expressed as the ratio of its capital to its assets.
The lender had said recently that it was in talks with interested foreign investors to seek an injection of NT$5 billion (US$151 million) of fresh funding, without elaborating.
The commission said earlier this week that the troubled lender would submit an updated self-bailout plan either through a merger or the introduction of foreign investors in the near future.
Prior to working at Waterland Securities, Chung held the chairmanship of Taiwan Business Bank (台灣企銀). He stepped down from that position in September 2005 after the lender's US$1 billion share sale collapsed following a labor union protest.
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