Taiwan Cooperative Bank (TCB, 合庫銀行), seeking to become a financial holding firm, yesterday reaffirmed plans to raise its capital by more than NT$5 billion (US$152 million) by the end of the year, allowing the lender greater financial leverage for expansion.
TCB chairman Liu Teng-cheng (劉燈城) said the bank would increase its capital from NT$54.85 billion to NT$60 billion so it would be in a better position financially to grow — including plans to develop into a financial holding company.
ACQUISITIONS
“The bank is working on [expansion] details,” Liu said by telephone. “The extra injection of funds will enable us to strengthen our portfolio or acquire assets. The picture will be clearer toward the end of the year.”
To qualify as a financial holding firm, TCB struck an agreement with BNP Paribas Assurance in January to set up an insurance arm with an initial working capital of NT$2 billion.
CONTROLLING STAKE
The local lender will have a controlling 51 percent stake in the joint venture, BNP Paribas Assurance TCB Life Insurance Co (合庫人壽), which is set to start operations in February.
Liu said TCB would not rule out the option of introducing foreign funds in its attempt to raise capital.
Last month, newly installed TCB president Tsai Chiu-jung (蔡秋榮) said that the state-controlled bank also planned to join forces with BNP Paribas in creating an investment and trust company next year.
Tsai said the Financial Supervisory Commission had given verbal approval to the new investment firm. TCB and its French partner are likely to divide their stakes by a 51:49 ratio.
With 301 outlets nationwide, TCB intends to separate its securities department and turn it into an independent brokerage firm, Tsai said, adding that no external fund would be introduced to found the planned securities house.
The government, which owns stakes in nine banks including TCB, is receptive to foreign funds as long as they help raise profitability and pose no threat to government interests.
WELCOME
Minister of Finance Lee Sush-der (李述德) said that as head of government assets, he welcomed any development conducive to growth and expansion.
“The ministry would not withhold approval if TCB and other banks [with a government stake] introduce foreign investors to their board as long as the practice is legal and profitable,” Lee said by telephone.
TCB posted NT$4.19 billion in pretax revenue for the first half this year, or NT$0.78 in pretax earnings per share. The lender said it expected the showing would improve in the second half.
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