The fate of the debt-ridden Chinese Bank (中華銀行) remained up in the air yesterday after the Central Deposit Insurance Corp's (CDIC) second auction to unload the lender attracted interest, but at a price too high for CDIC.
"After three price reductions, the price that the only bidder asked [CDIC to pay] still didn't fall within the range of our floor price," CDIC president Johnson Chen (陳戰勝) told a briefing yesterday afternoon.
The floor price range is usually 10 percent of the price, but Chen did not confirm whether that range was being used, as the auction was ongoing.
Authorized by the regulator's Financial Restructuring Fund, the CDIC will conduct another round of open negotiations with the only bidder for the troubled lender this morning, Chen said.
He declined to name the interested party.
As of late October, The Chinese Bank -- which CDIC took over in early January after the bank's parent company, Rebar Asia Pacific Group (力霸亞太集團), declared bankruptcy -- has a net worth of negative NT$29 billion (US$917.5 million). The CDIC is negotiating the amount of losses it must pay for the bidder to take over the lender.
But Chen said there was still a big gap between the amount the unidentified bidder was asking for and the maximum price the restructuring fund was willing to pay, which could continue to block talks today.
"I'd like to urge the bidder to aggressively cut its asking price, given the fact the government's restructuring fund doesn't have deep enough pockets," Chen said.
The fund is estimated to have some NT$28 billion left after spending approximately NT$24.3 billion on unloading three other smaller lenders.
Any delay in closing the deal will weigh on the government's restructure fund, which, on average, will have to cover additional losses of NT$1 billion per month as The Chinese Bank's losses continue to grow. Losses grew from NT$21.7 billion in March to NT$29.7 billion in October.
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