Hua Nan Commercial Bank (
Hua Nan President Hsu Teh-nan (許德南) said the asset management company will analyze the bad loans and determine how they will be disposed of from the bank's balance sheet. Taiwan banks are grappling with rising loan defaults as the island enters its worst recession on record, with analysts saying the economy probably shrank 4.4 percent in the third quarter from a year earlier.
"One of the options is to liquidate assets," said Lehman Brothers Japan Inc Managing Director Jonathan Epstein after the agreement was signed. "Others can be restructured and sold back in to the banking system and some could be securitized." Lehman is keen to do business with other Taiwan lenders and expects to make ``many additional investments'' in Taiwan, Epstein said.
The US-based investment bank was among foreign lenders who bought up US$15 billion of bad loans from the Thai government in August. Lehman, Salomon Smith Barney Inc and Lend Lease Corp paid as much as US$233 million in May for bad loans from Korea's Hana Bank.
Lehman also tried to buy bad loans from Metropolitan Bank & Trust Co, the largest Philippine lender and Equitable Banking Corp, the country's third-largest bank.
Taiwan, which defines non-performing loans as those on which there have been no interest payments for three months or principal payments for six months, said more than 11 percent of bank lending was non-performing or in trouble at the end of September, though private sector estimates are higher.
"We have a lot more work to do in coming weeks with Hua Nan," Epstein said.
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