Tue, Aug 14, 2001 - Page 17 News List

Minister addresses rumors

By Stanley Chou  /  STAFF REPORTER , WITH CNA

Minister of Finance Yen Chin-chang (顏慶章) said yesterday that there was no planned "second wave" to the takeover of grass-roots financial institutions over the weekend.

"Rumors that certain financial institutions with positive net worth but with capital adequacy ratio lower than 8 percent will be listed as the second wave target are incorrect," the finance ministry said in a statement on Sunday.

Yen said that the ministry would, on a regular basis, request financial institutions with weak financial situations to improve.

Local media reported over the weekend that some financial institutions with a positive net worth but with a capital adequacy ratio lower than 8 percent will become the target of a second wave of raids by the ministry. The finance ministry immediately denied the report.

"The financial reconstruction fund regulations stipulate that the target for the fund is those financial institutions with negative net worth, after adjustment by financial examination. All 36 grassroots financial institutions with negative net worth had been included [in the recent raid]."

The capital adequency ratio is a benchmark used by the financial sector to evaluate the soundness of a financial institution.

Despite the financial and social instability that they have created over the years, Chen Hsi-huang (陳希煌), chairman of the Council of Agriculture defended the grass-roots banks, insisting that they play an important role.

The 314 credit departments of the farmers' and fishermen's associations have been providing the agricultural community with services considered too trivial for banks to handle, Chen said.

The accumulated deposits at all credit cooperatives exceed NT$1.2 trillion, and the small loans extended by them amount to some NT$800 billion, Chen said.

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