Vice-premier Tsai Ing-wen announced on January 12 that Democratic Progressive Party premier Su Tseng-chang had accepted the resignation of Financial Supervisory Commission (FSC) chairman Shih Jun-ji to take political responsibility for “the disturbance to society caused by the eruption of a bank run on The Chinese Bank (TCB)”. FSC vice-chairman Susan Chang took over as acting chairman.
In the three-day run from January 5-9, thousands of panicking depositors withdrew T$32bn ($976.5m) in deposits from TCB branches in funds despite assurances by Mr Su, Mr Shih and other financial officials that all deposits were guaranteed by the Central Deposit Insurance Co after the TCB was ordered into receivership at midnight on January 5.
The run was sparked by media reports that Rebar Asia Pacific Group founder and chairman Wang You-tseng, who is also the TCB founder and managing director, had fled to China a day after group flagships Chinese Rebar Co and the Chia Hsin Food and Synthetic Fiber Co had filed for insolvency in late December.
According to FSC data, the publicly listed TCB had net worth of T$10.4bn and 36 branches as at November 30, even though it had a non-performing loan ratio of 8.84%, compared with the national average of 2.35%, based on loans of T$125.8bn and deposits of T$169.9bn.
Mr Wang was also a former chairman of the Republic of China General Chamber of Commerce and a member of the central standing committee of the former ruling Chinese Nationalist Party (Kuomintang) until last summer.
Prosecutors have launched a massive investigation into the TCB and other Rebar Group companies, and issued an all-points arrest order for Mr Wang and his wife, who are believed to be in the US.
Citigroup announces losses
New York-based Citigroup has announced a $326m fourth quarter loss in its Japanese consumer finance business. The banking giant said it would close 80% of its consumer finance branches in the country following a forecast decline in profitability caused by new government limits on lending rates.
Mizuho Financial Group, Japan’s third largest bank by Tier 1 capital, has announced it will take over Shinko Securities to create one of the country’s leading brokerage firms. Mizuho said it planned to merge Shinko with its brokerage unit early this year. The new unit would have revenue of about ¥600bn ($5bn). The combined company would have more than 6000 employees in 97 offices.
China has announced it will allow banks to issue renminbi-denominated bonds in Hong Kong. This is the first time that banks will be able to issue renminbi outside mainland China. The move will boost Hong Kong’s status as a financial centre and will provide mainland Chinese banks with a new source of funding.
The Agricultural Bank of China, the smallest of the country’s big four state-owned banks, has received approval from the banking regulator to set up a fund management joint venture with French Crédit Agricole and Chinese aluminium producer Chalco, according to the China Securities Journal. The joint venture would reportedly have a capital of Rmb100m ($12.9m).
Hong-Kong listed China Construction Bank has announced plans to list in China, revising a recent announcement in which it said it had no plans for an initial public offering (IPO). It is the largest Chinese bank by Tier 1 capital. The bank said it was also seeking to expand its network beyond the mainland and planned to open 14 branches in Hong Kong and Macau in the next three years.
China plans postal bank
China has approved a plan to turn the country’s postal savings system into a bank, which would reportedly become the fifth largest Chinese lender, according to the China Daily. The China Postal Savings Bank would be wholly owned by the China Post Group, a company worth $10bn formed out of the State Post Bureau. The bank would focus on developing retail and intermediary business, offering basic financial services to residents.
Industrial and Commercial Bank of China, the country’s largest lender by assets, has agreed to buy a 90% stake in Indonesia’s PT Bank Halim. The deal is the first cross-border bank acquisition carried out by ICBC, according to the Chinese bank, which completed the world’s largest IPO last year.
Vietnam has announced it is seeking to sell stakes in four state-owned commercial banks this year to improve their competitiveness, as part of the government’s programme to shift the country towards a market-based economy. The banks involved are Bank of Foreign Trade of Vietnam, Housing Bank of Mekong Delta, Bank of Investment and Development of Vietnam and Industrial and Commercial Bank of Vietnam. The government said the state would retain a majority stake in the banks.
NYSE buys India stake
The New York Stock Exchange (NYSE) has agreed to buy a 5% interest in the National Stock Exchange of India in Mumbai for $115m in cash, the maximum permitted for a foreign investor under Indian securities laws, the NYSE said. US investment bank Goldman Sachs and two private equity houses will also purchase 5% each in the Indian stock exchange. The total purchase price for the combined 20% stake is $460m. The New York-based investment bank has also reportedly gained a licence for investment banking and stockbroking in India, according to local news agency PTI. The NYSE said it had also tied an alliance with the Tokyo Stock Exchange and was completing its $15bn acquisition of Paris-based Euronext.
US-based Wachovia’s Evergreen Investments unit has announced it will buy a majority stake in London-based European Credit Management. The enlarged business would oversee more than $280bn in assets.
Leading Swiss wealth management group Julius Baer has sold 90% of its London-based fixed income operations, Julius Baer Investments, to the management. The company has $9bn in assets under management and is due to be renamed Augustus Asset Managers.
Dutch ABN AMRO Capital Life Science has spun out of parent ABN AMRO to create a new company called Forbion Capital Partners, which reportedly will be one of Europe’s largest private equity life sciences investment funds.
Piraeus Bank, the fourth-largest Greek bank by Tier 1 capital, has launched an offer to buy Cypriot Marfin Popular Bank. The regulator accepted the bid while blocking the Cypriot bank’s intention of bidding for Piraeus. Marfin’s intentions to buy Bank of Cyprus have also been halted.
UBS heads into Mexico
UBS has received approval from Mexico’s finance ministry to offer banking services in the country. The Swiss bank said it planned to initially offer cash, foreign exchange and debt products to institutional investors in the country, beginning operations in the first quarter of the year.
Australian Commonwealth Bank has announced plans to buy 83% of Indonesia’s PT Bank Arta Niaga Kencana through its local subsidiary PT Bank Commonwealth for $29m. The deal is the latest in a series of foreign acquisitions in Indonesia’s banking system in the past 12 months.
