Fitch may cut Shin Kong

Fitch Ratings said it placed Shin Kong Financial Holding Co. Ltd. and its subsidiaries Shin Kong Life Insurance Co. Ltd., Taiwan Shin Kong Commercial Bank and Shin Kong Securities on rating watch negative.

Shin Kong Financial's BBB- long-term issuer default rating, F3 short-term issuer default rating, A(twn) national long-term and F1(twn) national short-term rating were placed on negative watch.

Shin Kong Life's BBB+ insurer financial strength rating and AA-(twn) national insurer financial strength rating were placed on negative watch.

Taiwan Shin Kong Commercial Bank's BBB- issuer default rating, F3 short-term issuer default rating, A(twn) national long-term rating and F1(twn) national short-term rating were placed on negative review.

Shin Kong Securities BBB- long-term issuer default rating, F3 short-term issuer default rating, A(twn) national long-term rating and F1(twn) national short-term rating were placed on negative review.

The negative watch mainly reflects issues at Shin Kong Life, which faces increased pressure to maintain adequate capitalization, Fitch said. The largest subsidiary's loss in the first half of 2008 substantially reduced its capital cushion, the agency said.

Nonetheless, Fitch said it understands there has been positive progress in Shin Kong Financial's fund raising, including NT$8 billion common shares and NT$4.7 billion sub-debts, to support Shin Kong Life's potential capital needs.

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