The board of Jih Sun Financial Holding Co (日盛金控), which has Japan’s Shinsei Bank and US-based Capital Target Ltd among its shareholders, approved a recapitalization proposal to strengthen its banking unit’s financial structure yesterday.
In a filing to the Taiwan Stock Exchange, Jih Sun Financial said the recapitalization of Jih Sun International Bank (日盛銀行) would be implemented in two stages.
Jih Sun Bank will first cut its capital by NT$12.54 billion (US$383 million) by buying back and canceling 1.25 billion common shares. Following the 82.58 percent reduction in its capital, the lender will have capitalization of NT$2.64 billion, the filing said.
Afterward, Jih Sun Bank plans to raise NT$9.4 billion by issuing 940 million new shares, which would boost its capital to NT$12.05 billion, the filing said.
Jih Sun Financial said it would subscribe to all of these new shares issued by its banking subsidiary, which has suffered bad credit and underprovided loan loss reserves.
The recapitalization plan came after Jih Sun Financial completed a capital injection of NT$9.4 billion from existing shareholders last month to improve its capital strength.
At the time, the nation’s second smallest financial holding company by assets said it would inject the fresh capital into its banking unit to increase its capital adequacy.
At the end of March, Jih Sun Bank had a net worth of NT$7.63 billion, the fifth-lowest among local lenders, and a non-performing loan ratio of 4.03 percent, the fourth highest, Financial Supervisory Commission statistics show.
In separate news, the board of Far Eastern International Bank (遠東國際商銀) has agreed to acquire the local credit card and accounts-receivable businesses of American International Group Inc (AIG) for between NT$2.3 billion and NT$3 billion.
The New York-based global insurance giant is divesting itself of overseas operations to strength finances.
Far Eastern Bank said in a statement on Wednesday night that the decision to buy AIG Credit Card Co (Taiwan) (友邦信用卡) would boost its share of Taiwan’s credit card business. It expects to close the deal at the end of this year, the statement said.
The lender is the banking arm of the nation’s biggest textiles maker, Far Eastern Textile Co (遠東紡織), which is owned by Douglas Hsu (徐旭東).
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