Taiwan's bank restructuring is the latest buzzword in the Asian financial grapevine, although bankers say that the government has yet to come up with clear-cut guidelines on how to handle weak banks without hurting the economy. \nLast week, Minister of Finance Yen Ching-chang (顏慶章) said he is not likely to let weak banks with "normal operations" collapse for fear of potential repercussions on the banking system as a whole. \nRather, the government has expressed its interest in bringing in international investment firms to smooth the otherwise rocky road of restructuring. Leading international investment banks -- Lehman Brothers, Goldman Sachs and Deutsche Bank, among others -- are now vying to establish asset management companies (AMC) in Taiwan, Chinese-language media reports said. \nIndependent analysts estimate Taiwan's overdue loan ratios now top 10 percent, although official figures put it at slightly over 5 percent or NT$1 trillion. While most of the loans are backed by collateral, the poor health of the property sector makes it difficult to clean up the system, analysts say. Bruce Richardson, head of Asian financial institutions research at Indosuez WI Carr Securities in Taipei, believes that the non-performing loan ratio would be much higher if it were calculated according to more rigorous international standards. \nA Chinese-language economic daily reported on Saturday that Chinatrust Commercial Bank (中信銀) has also expressed its interest in joining with a foreign partner to set up an AMC to help clean up domestic bad loans. \nResponding to the report Chinatrust officials acknowledged their interest but cited "ambiguous government regulations" as an obstacle. In theory, AMCs will buy up bad assets -- at at least a 50 percent discount to face value -- from weak banks and then resell them on the market at a profit. In Thailand, for instance, AMCs bought loans at around a 70 percent discount, according to analysts. \nMany bankers and analysts, however, believe that the process is more complex and riskier than it appears on the surface. \n"What if banks are not willing to acknowledge the quality of their assets?," questioned Dominic Lin, an economist and fund manager with China Investment Trust Corporation. \nSelling the property into the market will be detrimental to the health of the already weak real estate sector, analysts say. "The last thing about collateral is that it is usually useless," says Richardson of Indosuez. Former Minister of Finance Paul Chiu concured with the rational saying, "The property market is quite bad," particularly in Central and Southern Taiwan. \nWhile Taiwan's average overdue loan ratio is low by Asian standards, several local banks have bad loans in excess of 20 percent. "They are literally bankrupt," because their capital is not enough to cover up for the loss, Lin of China Securities Investment Trust, said. \nIndeed, economists believe that the government should set up a ceiling for all financial institutions and then "force" the banks with bad loans in excess of that level to be taken over by AMCs. \nAndy Xie, chief economist for Asia Pacific at Morgan Stanley Dean Witter, believes that Taiwan "has to make a lot of important decisions," particularly in terms of restructuring while the high-tech sector is still competitive. \nHowever, given the magnitude of the problem, the government must play a bigger role, particularly in terms of offering incentives, analysts say. "Such gestures will encourage participation from the private sector to resolve the issue," said Patrick Pang, a bank analyst for Lehman Brothers in Hong Kong. \nWhile most Asian banks have gone through painful reforms, particularly in the aftermath of the Asian economic crisis, restructuring in Taiwan has remained slow-paced, thanks mainly to its strong financial health. \nAnalysts believe that the apart from the AMCs, a US-style Resolution Trust Corp (RTC) -- entirely funded by the government -- may be set up to deal with the domestic credit unions and other financially-challenged regional level banks. \nBut the government's ability to come up with the money for an effective RTC, given its skyrocketing budget deficit, remains uncertain. \nAssuming only half of Taiwan's estimated NT$1 trillion is not recoverable, the government must come up with at least NT$812 billion to rescue the banking system, according to Indosuez WI Carr. \nBut the actual figure, if calculated based on more rigorous international standards, is expected to be much higher. Solving the local banking fiasco with a US-style RTC may be difficult, analysts say, because the non-performing loans during the 1980s savings and loan crisis in the US only accounted for 1 percent of the GDP. Taiwan's non-performing loans account for around 9 percent of the GDP. \nThe consensus view among industry analysts, however, is that Taiwan will weather the restructuring storm fairly well given the robust high-tech sector which is still offering solid support to its export-driven economy.
Softbank Group Corp plans to keep a stake in the chip designer Arm Ltd, even if it sells a partial interest to Nvidia Corp, the Nikkei reported. The companies are negotiating terms, the newspaper reported, citing sources. Softbank might take a stake in Nvidia after it buys Arm, the report said. Nvidia and Arm might also merge through a share swap, and Softbank would become a major shareholder in the combined company, it said. The two parties aim to reach a deal in the next few weeks, the sources said, asking not to be identified because the information is private. Nvidia is the
END TO SPECULATION: The hotel’s management contract has been extended, despite reports that it wanted to end its alliance with Hyatt Hotels over a deal with Riant Capital Singapore-based Hong Leong Hotel Development Ltd (豐隆大飯店股份) yesterday said it has extended a management contract to ensure the continued presence of the Grand Hyatt brand in Taipei, ending rumors that the two sides were parting ways. “We are pleased Hyatt is able to come to terms on the extension of the management contract of Grand Hyatt Taipei,” said Kwek Leng Beng (郭令明), executive chairman of City Developments Ltd (城市發展) and Millennium & Copthorne Hotels Ltd (千禧國敦酒店). Hong Leong Hotel Development is a subsidiary of Millennium, and both fall under the Hong Leong Group (豐隆集團). The Grand Hyatt Taipei (台北君悅大飯店), owned and built by
Gold surged to a fresh record on Friday, fueled by US dollar weakness and low interest rates, while silver headed for its best month since 1979. Spot bullion is up more than 10 percent this month, as US real yields lingered near record lows. While the ferocity of rallies in gold and silver cooled in the middle of the week, most market watchers predict there might be more gains ahead. Both metals have added about 30 percent this year, with gold and silver exchange-traded funds boosting holdings to a record, as concern about the fallout from the COVID-19 pandemic fuels demand for
MOVING FROM CHINA? The article did not name the company, but Foxconn, Wistron and Pegatron were among firms chosen for a production-linked incentive plan in India An Apple Inc vendor is looking at shifting six production lines to India from China, which could result in US$5 billion of iPhone exports from the South Asian nation, the Times of India reported, citing people familiar with the matter who it did not identify. The establishment of the facility would create about 55,000 jobs over about a year, the newspaper reported, not naming the Apple vendor. It would also cater to the domestic market and expand operations to include tablets and laptops, the newspaper reported. Samsung Electronics Co and Apple’s assembly partners are among 22 companies that have pledged 110 billion