The minister of finance said yesterday that Taiwan would not create a US-style resolution trust corporation to resolve the nation's overdue loan problem.
"Although the overdue loan ratio of credit cooperatives is considered relatively high, there is no necessity to establish a resolution trust corporation to handle the problem," Yen Ching-chang (顏慶章) said yesterday.
This is the first time that the minister of finance has stated clearly whether the government will use a state-run resolution trust corporation to solve the NT$1 trillion non-performing loan problem.
Yen supports using privately owned asset management companies to clean up the finance industry's mess.
In addition, the 2001 fiscal budget does not include money for a resolution trust corporation -- evidence that the ministry of finance has little intention of establishing one.
Originally, the finance ministry had been planning to establish both privately owned asset management companies and a state-run resolution trust corporation to tackle the nation's troubled banking industry.
Meanwhile, Premier Chang Chung-hsiung (
Yen made his comments on the government's intentions while briefing Chang.
"There will be only privately owned asset management companies. No state-owned asset management company has been considered by the finance ministry," Yen said.
"Taiwan only needs [privately run] asset management companies to assist in disposing of problematic loans. As to the high [overdue loan] ratio of the credit cooperatives, the administration has to solve the problem" and a plan is currently under consideration, he said.
"However, a resolution trust corporation is not needed to take care of the problem."
On Friday, the Legislative Yuan passed the Financial Institutions Merger Act. The bill includes regulations on the establishment of asset management companies.
A number of banks have signalled their intention to get into the business, including Chinatrust Commercial Bank (
As for the nation's troubled fishermen's and farmers' credit associations, Yen said he did have a plan to address that mess.
"The finance ministry has already a number of solutions to the problem," Yen said. "But since a final solution has not been determined, I am not able to disclose it yet. However, the related expenses will be included in the next fiscal budget. The finance ministry will take an active approach to the problem."
Meanwhile, local media reported yesterday that the finance ministry plans to merge ailing credit cooperatives and use an asset management company to rid them of bad loans.
The report, which quoted Yen, said the finance minister could outline the measures as early as today.
The plan allegedly will focus on potentially forcing credit cooperatives into merging into a national farmers' bank.
There are nearly 400 credit cooperatives and fishermen's and farmers' credit associations in Taiwan.
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