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Lone Star snaps up loans in Taiwan
TAIPEI, Taiwan -- U.S.-based private equity fund Lone Star has bought T$23.8 billion ($683 million) in bad loans from Chang Hwa Commercial Bank. Chang Hwa, Taiwan's sixth-biggest commercial bank, said it has sold the loans to shore up its balance sheet. The fund is buying the loans through its Lone Star Asia-Pacific Ltd. subsidiary, which has raised $4.3 billion to invest in nonperforming loans in Asia. It is currently focusing on Taiwan and in July bought T$33.4 billion ($958 million) in bad loans from First Commercial Bank. Industry sources suggest the banks get around 20 to 30 cents on the dollar back for the loans that they sell. U.S. investment banks and funds specialize in snapping up problem assets and trying to recoup more of the debts than the banks themselves can. After word of the sale, Chang Hwa shares are up 5.03 percent on Thursday morning, at T$16.70. Restructuring effortChang Hwa has slumped to a net loss of T$24.4 billion for the first nine months of the year, through September. That compares with a T$1.45 billion profit the same time last year. Chang Hwa, which began a three-year restructuring effort in March, is expecting a loss of T$20.9 billion for the year. Banks in Taiwan have suffered heavily as Taiwan works its way through its worst recession on record. The banks plan to sell around T$350 billion ($10 billion) in bad loans this year to help improve their asset base, according to investment bank UBS. In August, Lone Star lost out on a 1.05 trillion won ($860 million) bid for South Korea's SeoulBank, with authorities selecting a local bid from Hana Bank instead. (Full story)
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