CTBC Financial plans capital raising to strengthen its structure
CTBC Financial Holding has announced it is planning to raise further capital by issuing 2.397bn new common shares so as to boost its financial structure and make further investments and acquisitions. The bank has not stated when the new share sale is to take place but it plans is to sell 10% of the shares on the open market, with original shareholders and employees to account for 80% and 10% respectively. Following the sale, the bank's capital adequacy ratio will increase to over 180%.
CTBC reveals plans to strengthen financial structure

By Ted Chen / Staff reporter





CTBC Financial Holding Co (中信金控) yesterday said it is planning a capital increase scheme by issuing 2.397 billion new common shares in a bid to bolster its financial structure and is to use the proceeds for potential investments and acquisitions.

The company plans to sell 10 percent of the new shares on the open market, with original shareholders and employees to account for 80 percent and 10 percent respectively.

The company did not say when it expected to begin the new share sale, but had authorized its management to proceed with the planned deal at the appropriate time after obtaining approval from the financial regulator.

The issuance price for each share is also not fixed for the time being.

Following the issuance of new common shares, the company said its capital adequacy ratio would increase to more than 180 percent from 150.9 percent, while its double leverage ratio could drop from 109.2 percent to less than 100 percent.

Industry watchers have said the lower the double leverage reading, the better the company’s capital strength, as it indicates the firm’s lower risk in financing assets with debt and other liabilities.

CTBC Financial reported net income of NT$19.89 billion (US$606.9 million) in the first seven months of the year, with earnings per share of NT$1.3.

Consolidated revenue over the period totaled NT$116.28 billion, up 4.56 percent from a year earlier.

At an earnings conference yesterday in Taipei, CTBC Financial said auctioning details for its old headquarters building in Taipei’s Xinyi District (信義) are expected to be finalized by Sept. 22, with the sale likely to be completed before the end of October.

CTBC said nine companies, including insurance firms and foreign financial institutions, have expressed interest in bidding for its old headquarters.

In addition, the company said it is poised to book NT$727 million in disposal gains of a floor it owns on the Uni-President International Building in Xinyi District next month.

The company’s insurance arm, CTBC Life Insurance Co Ltd (中國信託人壽), was not affected by the recent stock market rout and did not weigh in on its equities positions during June and July, CTBC Financial president Daniel Wu (吳一揆) said.

CTBC Life contributed 18 percent of earnings to its parent company in the first half of the year.

“We began taking on blue-chips when the TAIEX fell below 8,000 points,” Wu said.

Meanwhile, the company yesterday said it is adjusting the terms of a share swap with Taiwan Life Insurance Co (台灣人壽保險) to factor in upcoming share and cash dividend payouts.

CTBC Financial this year paid NT$1.62 in dividends to shareholders, which was made up of NT$0.81 in shares and NT$0.81 in cash.

In May, the company announced that it was to swap 1.44 common shares in exchange for each Taiwan Life common share. The ratio has been adjusted to 1.6129 shares, the company said.

When the two companies approved the deal on May 12, CTBC Financial shares stood at NT$23.2, but they fell to an intraday low of NT$16.76 on Monday.

In contrast, Taiwan Life shares showed higher resilience during the bout of volatility, as they dipped less than 14 percent to an intraday low of NT$16.76 on Monday from NT$23.2 on May 12.

CTBC Financial shares gained 2.08 percent to close at NT$19.6 in Taipei trading yesterday, while Taiwan Life shares rose 3.18 percent to NT$30.85.