Citibank auctioned off 43 real estate properties with a market value of NT$101 million on Saturday, setting an example for others in the industry looking for ways to work off their bad loans.
The properties were collateral from home mortgage defaults. According to local media yesterday, the lowest bid in the auction came in at NT$420,000, while the highest was NT$11 million.
On average, prices in the auction were 31 percent below market value.
The public auction, the first of its kind in Taipei, drew the interest of many local bank executives. A few said they were considering following Citibank's model to unload collateral.
In July, Citibank held an unprecedented auction in southern Taiwan, in which the bank put up some 30 homes for sale after borrowers failed to repay their mortgages on time.
At that auction, properties carried an asking price as much as 40 percent below market value.
"We want to liquidate these houses as quickly and efficiently as possible before they lose more value in a market where we don't expect to see a recovery over the next six months to one year," said a Citibank official, who declined to be named.
In the July auction, 20 units were sold for NT$27 million, or 61 percent of what the US bank had hoped to recover.
"We will hold more auctions like this to keep capital flowing," the Citibank official said, adding that the bank has acquired roughly 300 homes from court auctions.
Domestic banks such as Fubon Commercial Bank (
The nation's non-performing loans among domestic banks rose to a record high of NT$929.1 billion (US$26.90 billion) at the end of June.
That works out to an average of 6.47 -- though many analysts believe the figure is far higher.
Realtors have warned that large-scale dumping of properties through auctions could have a "destructive" impact on the real estate market. Prices in Taichung and Kaohisung have fallen nearly 50 percent since the peak of the property speculation frenzy in 1989.
Last year, the number of annual property sales fell to 321,165 -- down from 508,748 in 1996, according to the Ministry of Interior. About one out of every six homes is now vacant.
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