Following a recent foreign media report that plans by China Development Industrial Bank (中華開發工銀) and Morgan Stanley to collaborate on forming an asset management company (AMC) had broken up, China Development denied the report, insisting that negotiations are still underway, local media said.
"Some foreign media reported recently that plans for setting up an AMC between China Development and Morgan Stanley have been terminated because China Development refused to accept an exclusive partnership proposed by Morgan Stanley," said Benny Hu (胡定吾), president of China Development, yesterday.
"It's incorrect to describe negotiations or cooperation between the two parties as having terminated."
Hu said that the exclusive partnership to buy bad loans from the nation's lenders proposed by the US investment bank -- which would bar China Development from buying loans in partnership with other asset managers -- is the major and the only difference between the two parties. "However, negotiations are still underway," Hu said.
Morgan Stanley officials in Taiwan could not be reached for comment.
As for reaching a resolution, Hu said that both China Development and Morgan Stanley have been searching for a consensus or alternatives. "As to how long it will take to complete negotiations, there is no timetable," Hu said.
China Development announced early this year that it will spend more than US$600 million to set up an asset management company with Morgan Stanley.
The company would purchase problematic assets from the local banking sector. It's estimated that the total amount of the purchase could reach NT$20 billion in its initial stages.
"The main point for China Development to set up an asset management company is to solve the financial difficulty existing in Taiwan's banking sector," Hu said.
"Were China Development to accept the exclusion partnership suggested by Morgan Stanley, it could seriously compromise the intention that China Development has to try to improve the financial sector's environment. "It's why China Development has insisted it will not compromise on the issue," Hu said.
Asked about whether China Development is looking for other candidates for the partnership, Hu dismissed the speculation.
"There are quite a few foreign institutions participating in the field of asset management, but China Development did not contact any other institution about the issue other than Morgan Stanley," he said.
The government is trying to encourage foreign companies and local financial institutions to form joint ventures to buy non-performing loans from Taiwan's more than 400 banks, finance companies and credit cooperatives.
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