The board of Ta Chong Bank (
"We plan to carry out the deal in the third quarter after getting shareholders' approval at the annual general meeting slated for June," said James Chiou (邱正光), a spokesman for the nation's fourth biggest cash card issuer, in a telephone interview yesterday.
The deal would be worth NT$3 billion (US$91 million) to NT$4.5 billion and potential buyers could obtain between a 13.7 percent to 19.2 percent holding in the bank, Chiou said.
The final sale price, the number of board seats to be offered and the form of the sale all depend on negotiations with potential buyers, he said.
Local small-cap banks have been raising funds in droves in the wake of consumer credit problems that have significantly weakened their finances.
For example, EnTie Commercial Bank (安泰銀行) is seeking NT$12 billion in fresh funds via a share issue to existing shareholders and interested foreign buyers this year.
Ta Chong had been approached by a number of foreign banks in Taiwan, such as HSBC Ltd, and by private equity funds but has not decided on a partner as yet, Chiou said.
Ta Chong would prefer a foreign bank as an investor that could bring know-how to help sharpen it's competitive edge, rather than a private equity fund, he added.
The fresh capital is expected to lift the bank's capital adequacy ratio and meet the stricter requirements in place since the implementation of the New Basel Capital Accord, known as Basel II, a new methodology to gauge banks' capital adequacy for better risk control.
The bank's capital adequacy ratio could reach a maximum of 10 percent, up from 8.5 percent last year, after the fundraising is completed, Chiou said.
Meanwhile, the board has agreed to issue debentures worth NT$10 billion this year. The bank issued a total of NT$8.6 billion in debt financing last year.
The cash-strapped lender incurred a heavy loss of NT$5.9 billion, or a NT$3.17 loss per share, last year after booking NT$13.2 billion to cover mounting bad debts.
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