Sat, Mar 02, 2002 - Page 17 News List

First Commercial seeking help with problem loans

BLOOMBERG , TAIPEI

First Commercial Bank (第一銀行), the nation's largest publicly traded lender, is seeking asset management companies to help sell NT$13 billion (US$370 million) of non-performing assets by the end of March.

The move is part of the bank's plan to sell more than NT$50 billion of assets by September, spokesman Song Jeen-shyang said, confirming a report earlier yesterday in a Chinese-language newspaper. The assets are both in Taiwan and overseas.

The bank wants foreign and local asset management companies to help with the sales, though Song said he hasn't heard about agreements with more than three foreign asset management companies, as the newspaper reported.

First Commercial, Chang Hwa Commercial Bank (彰化銀行) and other banks are either seeking or setting up asset management companies to help them clean up their balance sheets, providing opportunities for foreign firms including Goldman Sachs Group Inc, Lehman Brothers Holdings Inc and Cerberus Partners LP.

The bank wrote off NT$14.7 billion of bad loans last year. It doesn't have a target for this year because it's focused on selling non-performing assets, Song said. The bank may form a joint asset management venture if it can't complete the sales through external companies. Last year, the bank set aside NT$14.5 billion against bad loans and this year's provisions are expected to be about the same amount. The bank hired PriceWaterhouseCoopers to advise it on the management of non-performing assets.

The central bank said 11.3 percent of bank lending, or NT$1.64 trillion, was non-performing or in danger of default as of December. A slowing economy and slumping property prices have increased corporate defaults.

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