A group of domestic and international lenders said yesterday that they plan to set up the nation's first "financial assets services company" as part of the government's plan to clean up the troubled banking sector.
The Bankers' Association has set up a preparatory committee to form the company in the first quarter of this year, according to Minister of Finance Yen Ching-chang (
The purpose of a financial assets services company is to act as an impartial third party appraiser of bank collateral bought from asset management companies, said Lee Yon-san (
Lee, also chairman of the International Commercial Bank of China (ICBC,
The planned company will be capitalized at between NT$600 million to NT$1 billion with foreign investment making up a third of the total. Fifteen domestic banks have agreed to invest NT$50 million each in the company, along with three foreign institutions. The three foreign investment firms are Deutsche Bank, Lehman Brothers and Japanese leasing firm Orix.
"We are still in talks with a number of other potential foreign partners," Lee said.
The 15 domestic banks include Bank of Taiwan (
The company -- which officials are billing as the first of its kind in the world -- will be set up in view of the lengthy court procedures in selling real estate collateral.
It takes an average of roughly two years for courts to dispose of a piece of property.
The financial asset services company, according to Lee, will serve as another instrument to sell debt along with the existing courts system. It will receive mandates from asset management companies and the regulatory bodies to sort out loans before selling them. In addition, the company will also act as an impartial third party to evaluate the price of loans for banks.
It was not known the amount of debt, among the nation's total non-performing loans, that will have to go through court procedures, Lee said.
It is estimated that total overdue loans among the nation's financial institutions amounts to close to NT$1 trillion.
The nation's non-performing loans climbed to a record high of NT$776.47 billion, or 5.5 percent of total loans, at the end of October. The figure does not include grassroots financial institutions, which are also suffering from serious nonperforming loan problems.
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