Business Bank talks to asset companies

Taiwan Business Bank (台灣企銀), the nation's third-largest lender by assets, is talking with two foreign asset management companies about forming a tie-up that will take over some of the bank's problem lending.

The lender, which wrote off about NT$22 billion (US$629 million) of overdue loans and posted a loss last year, is looking for ways to dispose of its problem loans this year, said Senior Vice President Chen Chin-liang. Bad loan write-offs this year may not reach last year's total, he said.

"We are talking to a few asset management companies, both local and foreign," said Chen in a telephone interview.

"We are in closer talks with two foreign companies. We may sell loans to them or use the loans as the basis for an asset management venture."

Chen declined to name the parties or give a timeframe for making a decision.

Taiwan Business Bank and other Taiwanese companies are betting on mergers, partnerships and acquisitions to help them tackle rising bad loans and counter increasing foreign rivalry in an industry crowded by more than 300 banks, credit cooperatives and farmer and fishermen associations. The nation is recovering from its worst recession since the 1970s.

An unidentified US financial institution with plans to invest NT$20 billion in Taiwan Business Bank has suspended talks with the major shareholder, the Ministry of Finance, because of differences over price, a Chinese language newspaper reported earlier, without citing sources. Taiwan Business Bank's Chen said he hadn't heard about this.

The Taiwan Business Bank probably realized an after-tax loss of NT$12.2 billion last year according to preliminary estimates, Chen said. That compares with net income of NT$2.47 billion in 2000.

The company reduced its overdue loan ratio to 9.97 percent of all lending at the end of December after it sold more than NT$15 billion in subordinated bonds last year to boost funds for loan provisioning.

Its overdue loan ratio was about 11 percent before the bond sale, Chen said, adding that the bank currently has no plans to sell more bonds.

The bank classifies as overdue loans on which interest hasn't been paid for six months or more or on which principal is overdue by three months of longer.

Taiwan Business Bank shares, which lost two-fifths of their value last year, were unchanged at NT$6.35.