China Development Industrial Bank (中華開發銀行), Taiwan's largest lender by market value, has aligned with the Lone Star Group, a Texas-based investment fund, to set up a company that will buy bad loans from local financial institutions.
Lone Star signed a memorandum of understanding and a confidentiality agreement with China Development last month, said James Ouyang, project adviser at the Taiwan lender. China Development was originally negotiating with Morgan Stanley to handle the loans. According to local media reports, the joint-venture plan with Lone Star is likely to be concluded in this month.
As much as NT$1 trillion in non-performing loans are currently being held by the local banking sector. Five asset management companies plan to enter the local market to help deal with the bad loans.
In addition, a financial asset service company will provide real-estate appraisal services to AMCs.
The Taiwan Asset Management Co (
Hua Nan Commercial Bank (
Chinatrust Commercial Bank (
The joint venture between Chinatrust and Goldman Sachs has been postponed, a bank executive said last week.
The Overseas Chinese Bank, on the other hand, has been planning to put up its NT$30 billion in non-performing loans as its investment share in the joint venture.
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