SinoPac Financial Holdings Co (永豐金控) expects to make a profit of NT$2.06 billion (US$63.77 million) from the sale of 100 percent of its shares in a US banking subsidiary.
SinoPac Financial Holdings said the board has approved the sale of its shares in California-based Sino-Pac Bancorp for US$353 million, according to a company statement filed with the Taiwan Stock Exchange on Friday last week.
SinoPac Bancorp operates Far East National Bank (FENB, 美國遠東國民銀行) in the US banking subsidiary.
SinoPac Financial Holdings plans to sell SinoPac Bancorp to Cathay General Bancorp (國泰萬通金控), which operates Cathay Bank (國泰銀行), SinoPac Financial said in a statement.
SinoPac Financial also agreed to accept up to 10 percent of the purchase price in shares of Cathay Bank’s common stock, according to the company’s filing.
“Due to challenges presented by the immense size of the US market, FENB has not achieved the required economies of scales since the company began its American venture in 1997, and the number of banking branches have been capped at nine,” SinoPac Financial chief financial officer Michael Chang (張晉源) said in the statement.
FENB, founded in 1974, was acquired by SinoPac Financial in 1997. Its total assets tallied US$1.25 billion as of the end of last year. In addition to a representative office in Beijing, the bank has nine branches throughout Californian regional markets including Los Angeles, Orange County, Silicon Valley and San Francisco, SinoPac Financial said.
FENB made US$9.92 million in net profit last year, a SinoPac Financial statement said.
The transaction is expected to be completed in the first half of next year, pending adjustments and regulatory approval, SinoPac Financial said.
After the transaction, SinoPac Financial will only operate one US banking branch in Los Angeles, via its banking unit, Bank SinoPac (永豐銀行).
As of the end of last year, Cathay General Bancorp’s total assets were US$13.25 billion, the NASDAQ-listed company’s filings showed.
Cathay Bank has 57 US branches and net income last year rose 16.88 percent annually to US$161.11 million, company data showed.
In a separate company filing to the Taiwan Stock Exchange on Thursday last week, SinoPac Financial reported that net income fell 8.5 percent sequentially last month to NT$665 million.
That was an annual reduction of 35.31 percent.
Net income in the first six months of this year fell 22.46 percent annually to NT$5.08 billion, company data showed.
Aggregate net income by Bank SinoPac, the company’s most profitable unit, fell 24.33 percent annually to NT$4.12 billion in the first half.
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