Sun, Mar 24, 2002 - Page 11 News List

Seizure of Chung Shing extended for six months

BLOOMBERG , TAIPEI

Taiwan's Ministry of Finance has extended the seizure of troubled Chung Shing Bank for six months to protect depositors and seek buyers as part of a government plan to consolidate the nation's banking industry.

The ministry seized Chung Shing Bank for the first time last October after it said the bank "is no longer able to bear risks due to its deteriorating finances and has endangered rights of depositors."

The previous seizure was due to on March 25. It would be extended because the government failed to attract a bid in auctions to sell the bank, the ministry said.

The six-month extension will "prevent disruptions in the bank's operations and allow the ministry to sell the bank through private placements," the statement said.

Taiwan is prodding financial companies to merge to strengthen their businesses after an overcrowded industry forced lenders to accept riskier customers during a recession, driving up loan defaults.

Taiwan may order the state-run Bank of Taiwan to shoulder the troubled lender, Chung Shing spokesman Pai Ching-chung said.

The ministry estimated last month Chung Shing has NT$16.4 billion (US$468 million) more liabilities than assets and an operating shortfall of about NT$30 billion, Pai said.

The ministry has promised to use state-run Resolution Trust Corp's funds to bridge Chung Shing's cash shortfall to make the bank more appealing to buyers.

Taiwan's central bank said 11.3 percent, or NT$1.64 trillion, of Taiwan's bank lending was non-performing or in danger of default as of December as a slowing economy and stagnant property market caused more businesses to collapse. Taiwan's economy shrank 1.9 percent last year, the first full-year contraction since records were first complied in 1952.

This story has been viewed 2202 times.
TOP top