First Commercial Bank (
Foreign and local asset management companies (AMCs) have been keen on placing bids at the March 27 auction.
So far, 11 AMCs expressed interested in shopping for bargains at the event. The open competition among AMCs for the non-performing loans (NPLs) is anticipated to help First Commercial recover a sizeable portion of the bad loans' value, the bank said.
"We'll not set up a lowest price for bidders to start with. However, if the highest offer does not match the price we want to sell for, we will negotiate again to avoid failed bids," the bank's vice president Huang Shiu-nan (
The auction will be open, time-saving and the first ever in Taiwan, he said.
PriceWaterhouseCoopers, which advises the bank on the assets' management said in a written statement that "now is the best time for domestic banks to clean up non-performing assets since foreign investors have a favorable assessment of Taiwan's market."
"We're confident that the bidding mechanism will help the bank receive the best price," managing director Jeffrey Shia (
Shia added that the bank plans to write off a total of NT$62 billion in bad loans before the end of June.
First Commercial's management of non-performing loans has attracted other domestic banks' attention.
Executive vice president of Chiao Tung Bank (
"We are not opposed to emulating their method if it succeeds," Huang said.
Chiao Tung's Huang, however, was not very optimistic about the measure's feasibility, saying "it's usually hard to bargain for a good price at an auction and we are not sure who and where the buyers will be."
A market analyst, who declined to be identified, was even more pessimistic. A pundit from International Commercial Bank of China (
The recovery rate for banks on NPLs, if being auctioned in local courts, usually ranges from 30 percent to 50 percent of a loan's actual value.