The Financial Supervisory Commission (FSC) yesterday fined SinoPac Financial Holdings Co (永豐金控) NT$10 million (US$326,364) for irregular lending practices and advised the company to simplify and downsize its organizational structure.
As of the end of last year, the company had extended a total of NT$4.3 billion in loans to Sunpower Development Group (三寶建設集團) affiliates, of which nearly the entire amount were uncollateralized, the commission said.
The loans were made through an overseas-based subsidiary under the company’s leasing arm, SinoPac Leasing Co (永豐金租賃), without meeting its own internal control and auditing requirements, the commission said.
Although many of Sunpower’s affiliates did not submit financial statements, they acquired loans based solely on unverified invoices, the commission added.
In addition, SinoPac Financial had continued to increase its line of credit to Sunpower in exchange for low-quality collateral without verifying the purpose of the loans, the commission said.
The commission also questioned SinoPac Financial’s decision to manage a complicated multi-tiered network of subsidiaries, and if the parent company had met its governance objectives.
Despite the large scale of the loans, guidelines do not require loans made by “great-granddaughter” subsidiaries to be approved by the parent company’s board of directors, the commission said.
However, the commission said that Sunpower has been servicing its debts without incident.
The commission advised SinoPac Financial to submit a plan making the necessary improvements to prevent continued punitive measures within two months.
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