The Financial Supervisory Commission (FSC) and Taishin Financial Holding Co (台新金控) sought to reassure investors yesterday that the company’s operations remained normal, rejecting rumors of a liquidity crunch and that it was at risk of being taken over by the government.
“All the market rumors and media speculation are groundless,” Taishin Financial chairman Thomas Wu (吳東亮) told a news briefing yesterday. “We take these rumors seriously and will take legal action against them.”
Wu said the company had presented evidence of some former employees, peer bankers and market speculators manipulating its share price or undermining its business credibility to the FSC for investigation.
He added that the company had given up a plan to raise funds from the open market after its share price fell below its net worth of more than NT$10 per share.
Taishin Financial’s yesterday stock dropped another 6.9 percent to NT$5.76.
Instead, Taishin Financial is in talks with several foreign private equity funds about capital injection, Wu said.
Taishin had already suffered NT$30 billion (US$936.2 million) in net withdrawals in the past two weeks because of these rumors, the company’s chief financial officer, Carol Lai (賴昭吟), said at the briefing.
Despite the higher-than-normal withdrawals, Taishin Financial still has NT$100 billion in liquidity reserves, or a required reserve ratio of 18.34 percent, in the form of negotiable certificate of deposits issued by the central back, Lai said.
“That means Taishin Financial has more than twice the required reserve ratio of between 8 percent and 9 percent,” she said, adding that the company had enough liquidity for interbank lending and had never borrowed any cash from its peers.
The company had a 102 percent capital adequacy ratio (CAR) and a Bank for International Settlements ratio of 9.8 percent as of Tuesday, as well as NT$1.1 billion in earnings in the first eight months of this year, Lai said.
The bank’s attorney, Lindy Chen (陳玲玉), urged market manipulators to refrain from spreading rumors about the company or face a prison term of between two and 10 years for violating the Securities and Exchange Act (證交法).
Later, at another media briefing, FSC Vice Chairman Wu Tang-chieh (吳當傑) reiterated the commission’s determination to combat “market vultures, rumors and groundless messages.”
The FSC yesterday teamed up with the Ministry of Justice to set up a task force and a liaison mechanism, vowing to work together to investigate irregularities in the local financial market.
The first meeting will be held in a month to discuss ways to improve communication between the two agencies, including meeting every two months to discuss progress in their investigations, FSC Chairman Gordon Chen (陳樹) said yesterday.
“We are very determined to combat financial irregularities and maintain market order,” Chen said.
To minimize the impact on the stock market, Minister of Justice Wang Ching-feng (王清峰) said yesterday that investigators would do their best to conduct raids or searches after trading hours, for example on Friday afternoons or during the weekend.
The ministry has also launched a program early this year to improve probes into financial crimes by conducting training and creating an evaluation system to qualify investigators.
By 2010, only middle-ranking and senior investigators who have completed these training programs will be assigned to work on financial crime investigations, Wang said.
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