Banks' bad loans near NT$1 trillion

Bad loans at Taiwan financial institutions, including banks and local farmers' and fishermen's cooperatives, rose to almost NT$1 trillion (US$32 billion), at the end of August, local media reported yesterday, citing central bank Governor Perng Fai-nan (彭淮南).

Past-due loans excluding local-level financial institutions rose to a record by the end of that month, both in absolute and percentage terms, to NT$740.3 billion (US$23 billion), or 5.31 percent of total outstanding bank loans,.

At Taiwan's local-level financial institutions, 17 farmers' and fishermen's cooperatives reported negative net assets in August, and 15 of them agreed to surrender ownership to suitable buyers, Perng said.

According to finance ministry figures the total value of overdue loans for banking institutions just three months ago came to NT$850 billion.

Vice Premier Lai In-jaw (賴英照) said Monday the government will seek to strengthen the troubled banking industry by introducing new incentives for sector players to merge.

"On the issue of the soundness of financial institutions, there are simply too many domestic banks, which is creating vicious competition and is forcing many banks to take on greater risk," resulting in widespread overdue loan difficulties, Lai said.