Newly installed First Financial Holding Co (第一金控) chairman Ray Dawn (董瑞斌) yesterday said he intends to write down all bad loans linked to Kaohsiung-based Ching Fu Shipbuilding Co (慶富造船) by the end of this year so the state-run financial services provider can start anew next year.
Dawn made the remarks yesterday morning after being sworn in as the conglomerate’s chairman.
“It is important for banks to strike a balance between the pursuit of returns and potential risks, as risks are inevitable in the pursuit of profit,” Dawn told a news conference.
While First Financial must support government policies, it also has to protect the interests of its other shareholders, Dawn said.
The Ministry of Finance holds a 30 percent stake in First Financial, while private shareholders account for the rest.
Dawn said he is inclined to write off all bad loans connected to the shipbuilder by the end of the year, even though doing so might affect bonus payouts for this year.
Year-end bonus payouts equivalent to three or four months of regular pay are not bad, compared with 4.6 months in the past few years, he said.
First Financial’s main subsidiary, First Commercial Bank (第一銀行), the lead bank of a NT$20.5 billion (US$681.97 million) syndicated loan to the troubled shipbuilder, might have to write down more than NT$3.5 billion in bad debt.
“First Commercial Bank can start anew next year after strengthening its asset quality,” Dawn said.
Project financing is not a problem, but the bank failed to monitor cash flow after the appropriation due to a lack of information, he said, adding that the lender should learn its lesson and supervise more responsibly.
First Commercial Bank would continue to take part in government-backed projects as long as they do not compromise the lender’s interests, Dawn said.
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