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Chinfon Bank taken over, Vietnam’s branch still operational   2008-09-29 - Vietnamnet

At 5 pm on September 26, Taiwan’s Financial Supervisory Commission (FSC) unexpectedly announced Chinfon Bank had officially been taken over by Taiwan’s Central Deposit Insurance Corp (CDIC). However, FSC has guaranteed that all rights of individual and organisational depositors at the two branches of Chinfon Bank in Vietnam will be protected.


James Su, SVP and Branch Manager of the Hanoi branch of Chinfon Bank in Vietnam

Right after the announcement, the State Bank of Vietnam released a notice that confirmed that the two branches of Chinfon Bank in Hanoi and HCM City will still operate normally while the new owner of the bank is being found. The government of Vietnam and the State Bank of Vietnam have committed to support the ownership transfer process.


FSC has confirmed that the interests of individuals and institutions who have deposits at the branches of Chinfon in Vietnam will not be harmed, while the operation of the two branches will not be interrupted during the ownership transfer process.


"Every penny of the depositors will be protected " Wu Tang-chieh, FSC Vice Chairman, said.


CDIC’s notice said that in the immediate time, the Bank of Taiwan will manage Chinfon Bank. Taiwan News on September 27 said that the Bank of Taiwan has injected NT$10bil to ensure the solvency of the bank.


Chinfon Bank has the total assets of NT$84.6bil, or US$2.6bil (the figure released in June 2008).


Due to continued losses, the net value of the bank had reduced to minus (–) NT$7.7bil or US$240mil by the end of August. The bank has the highest bad debt ratio in Taiwan at 29.26%, according to Taipei Times.


Chinfon Bank branch in Hanoi

Despite the clear heavy losses incurred by Chinfon Bank, the announcement of the takeover still surprised many people. On Tuesday last week, FSC said that there was still no reason to take over Chinfon Bank.


However, FSC Chairman Gordon Chen on Friday organised an urgent press conference, announcing the takeover of Chinfon Bank, citing Article No 62 of Taiwan’s Banking Law which says that a bank is to be taken over if it falls into insolvency or depositors’ benefits are threatened.


Gordon Chen’s statement on last Tuesday about the worse-than-forecast financial health of Chinfon Bank has led to a wave of withdrawing deposits from Chinfon Bank. Within three days, depositors withdrew NT$1bil, or over US$30mil.


On Wednesday, President of Chinfon Bank Huang Shih-hui violently condemned FSC’s negative statements about Chinfon Bank, asking the FSC Chairman to take responsibility if a panic of depositors occurred.


Answering VietNamNet this morning, James Su, SVP and Branch Manager of the Hanoi branch of Chinfon Bank in Vietnam, said that with the support of the Taiwanese government, everything has been going smoothly, and that Chinfon Bank has contacted clients and banks, explaining the news about the bank.


He said that in Vietnam, the maximum credit insurance level is $3,000, but in other countries, depositors’ interests are fully protected; therefore, Vietnamese depositors do not have to worry about their money.


He said that NT$10bil is ready to support the operations of Chinfon bank in both Taiwan and Vietnam, but it is very likely that the sum of money will not be used, because the branches in Vietnam have been performing very well.


He affirmed that no client has withdrawn money since the news about the takeover of Chinfon bank was released.


Mr Su said that in Taiwan, no case of bank bankruptcy has ever happened, only banks merged into bigger banks, as the government tries to avoid the domino effect in the financial market. The news about the merge of Chinfon Bank into another bank do not stir the market as 95% of depositors at Chinfon Bank are Taiwanese, who well understand the law.


Regarding the future of Chinfon Bank, Mr Su said that procedures are being followed to merge Chinfon bank into another. The brand name ‘Chinfon bank’ will disappear. He affirmed that the normal operation will be kept at the two branches, which will help keep income and profit for the two branches.


The two Chinfon Bank branches in Hanoi and HCM City on September 29 in the morning were still operating as usual.


In Hanoi, some Taiwanese clients were seen coming to make transactions. In HCM City, Le Vu Quynh Trang, Head of the Transaction Office, said that most of the bank’s clients are foreigners, who have already heard about the happenings with Chinfon Bank, and they are calm.

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