Business NEWS

UCBH Holdings ousts CEO, COO, reaches deal with regulators

By Amarendra Bhushan for CEOWORLD Magazine Updated:September 9, 2009

UCBH Holdings Inc said two top executives resigned and demoted its finance chief after a board audit panel raised concerns about the actions of several current and former officers.

UCBH said its Chief Executive and Chairman Thomas Wu and Chief Operating Officer Ebrahim Shabudin, who was also the former chief credit officer, resigned.

The company said the Federal Deposit Insurance Corp and the California Department of Financial Institutions issued a cease and desist order, and it has signed a consent agreement with regulators.

The agreement requires the company to outline specific steps it must undertake to strengthen its policies and procedures and enhance the soundness of the bank.

The Board has also:

1) elected Lead Director Joseph J. Jou, who has over 20 years of banking experience including as founder and Vice Chairman of First Continental Bank, as Chairman;
2) entered into an agreement with the Federal Deposit Insurance Corporation (FDIC) and the California Department of Financial Institutions (DFI) to enhance the strength and stability of the Bank and its operations;
3) received and adopted the findings and recommendations of the Investigation Subcommittee of the Board Audit Committee`s independent investigation, which began on May 15, enabling the Company to move forward with its financial restatement;
4) accelerated certain of the Company`s capital planning initiatives, including a review of all capital raising and strategic alternatives to maximize shareholder value.

Chairman of the Board of Directors Joseph J. Jou said, “Doreen Woo Ho is the right person to lead UCBH through this challenging period and strengthen the foundation of the Company for our valued customers, employees and shareholders. Since joining UCBH in January 2009, Doreen has provided strong leadership to the Community Banking organization and, since July, to the Commercial Banking business as well. Doreen has consistently demonstrated effective leadership in driving operating performance and value for clients in a number of executive
management roles over more than 35 years in the banking industry. The full Board is confident in Doreen`s ability to the lead the Company.”

“UCBH has a strong franchise, and we are working intensely to address our operating challenges and further strengthen our management team in this difficult economic environment,” said acting President and Chief Executive
Officer Doreen Woo Ho. “Together with our regulators – the FDIC, DFI and the Federal Reserve – we are moving forward to put the Bank in a solid position for the future, while we continue to provide our customers in the U.S. and China with our high standards of service and our full range of lending, commercial banking and retail banking products and services. As we do this, we are also pursuing a full range of strategic alternatives to strengthen our capital foundation and to maximize shareholder value.”

Ms. Ho`s and Mr. Jou`s appointments are subject to final review and approval by the Company`s regulators, who have been informed of the changes. In addition, Director Joseph E. Vaez has resigned from the Board of Directors of the Company for personal reasons, but will continue to actively advise the Company in a consulting capacity on risk oversight, credit administration and regulatory matters. He will continue to be engaged with the Risk Oversight Committee, and is expected to be succeeded by Dennis Wu as Chairman of the Committee.

The Bank also announced that Craig On will continue as Chief Financial Officer until the Company recruits a new person for that position. The Company has requested that Mr. On re-assume his former position as Deputy Chief Financial Officer at that time. The Company is also actively engaged in a search for a Chief Credit Officer.

China Minsheng Banking Corp., Ltd. expressed continued support of UCBH and the new leadership under Doreen Woo Ho. China Minsheng views its investment in UCBH as long term and strategic, evidenced by the trade finance and other business cooperation activities between the two banks. Most recently, China Minsheng has sent 17 training participants to UCBH for training in retail banking and other departments. China Minsheng`s executive management is also planning to visit UCBH in late September to further discuss and enhance the strategic cooperation between the two banks.

Agreement with FDIC and DFI

The Bank also announced that it has entered into a consent agreement (the “Agreement”) with the FDIC and the DFI on September 3, relating to the issuance of an Order to Cease and Desist. This order formally outlines specific steps the Bank must undertake to strengthen its policies and procedures and enhance the soundness of the Bank.

The Agreement requires that the Bank perform an assessment of management and address weaknesses in management policies and practices, Board supervision, adequacy of capital, loan valuation reserves, loan quality, lending and collections practices, operational issues, liquidity and compliance. The Agreement will be further described in a Current Report on Form 8-K to be filed by the Company with the Securities and Exchange Commission.

Under the Agreement, the Bank will also submit a written three-year strategic plan and profitability plan to the FDIC and the DFI, notify both agencies in dvance of any director and management changes, and obtain prior written consent of both agencies before opening new branches. The Agreement also requires the Company to obtain prior approval from its regulators before paying dividends to shareholders.

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