Financial Crime World

Bank Liquidation Plan and Balance Sheet Reveal Key Insights

Introduction

A Taiwanese bank has recently submitted its liquidation plan to the Financial Supervisory Commission (FSC) within the three-month deadline. The plan outlines the repayment of debts, distribution of remaining assets, and final steps in the winding-up process.

Repayment of Debts

  • The bank has identified creditors who have been repaid in full through the winding-up proceedings.
  • For these creditors, the unpaid portion of their claims will be deemed extinguished, bringing closure to outstanding debts.

Distribution of Remaining Assets

  • Any remaining assets after debt repayment will be distributed among the bank’s shareholders.
  • This move aims to provide a fair and equitable outcome for stakeholders involved.

Liquidator’s Duties

  • Within 15 days of completing the winding-up process, the liquidator is required to make a public announcement of the relevant books and records.
  • A filing with the FSC will be made to cancel the bank’s license, marking the end of its operations.

Capital Adequacy Guidelines

  • The FSC has set capital adequacy guidelines in line with Basel III standards.
  • These requirements aim to ensure the financial stability of banks operating in Taiwan.
    • Common Equity Tier 1 Ratio will be increased annually until 2019.
    • Tier 1 Capital Ratio and Total Capital Adequacy Ratio will also be increased annually.

Ownership Restrictions

  • Taiwanese regulations impose certain restrictions on foreign ownership of banks.
  • While there is no general restriction on foreign investment, PRC investors are subject to specific limitations.
    • Any QDII-approved institution may trade listed shares of a Taiwanese bank up to a maximum shareholding of 10%.

Implications for Controlling Entities

  • Entities controlling banks are subject to regulation under the Financial Holding Company Act (FHCA).
  • This includes reporting obligations, business activities, and capital adequacy requirements.
  • In the event of bank insolvency, there is no criminal or administrative sanction imposed solely due to control.

Changes in Control

  • To acquire control of a Taiwanese bank, regulatory approvals are required.
  • The definition of “control” refers to holding more than 25% of issued voting shares or having direct or indirect power to appoint the majority of directors.

Conclusion

The liquidation plan and balance sheet reveal key insights into the winding-up process of this Taiwanese bank. As the financial sector continues to evolve, it is essential for regulatory bodies to maintain a watchful eye on capital adequacy guidelines and ownership restrictions to ensure the stability of the market.