Thu, May 02, 2002 - Page 17 News List

Chung Shing buyers will likely need a fat wallet

STAFF WRITER

Potential buyers of debt-ridden Chung Shing Bank (中興銀行) may have to put up another NT$12.5 billion to keep the troubled institution going -- even after a government-run financial clean-up fund injects money of its own, a Chinese-language newspaper reported yesterday.

The government has promised to use the NT$140-billion Financial Restructuring Fund (金融重建基金) to help Chung Shing cover bad loans and make the bank more appealing to buyers, the Liberty Times reported yesterday, citing Vice Minister of Finance Susan Chang (張秀蓮).

Chung Shing is currently sitting on roughly NT$40 billion in bad loans.

"But any interested buyer would need to spend at least another NT$12.5 billion in order to bring the bank's capital-adequacy ratio above 8 percent," the report quoted Chang as saying.

Capital adequacy is the ability to provide banking services to the public while maintaining the legally required ratio of capital to assets.

In compliance with the nation's Banking Law, banks operating lending business are required to hold capital equal to at least 8 percent of their assets.

The ministry is using the financial clean-up fund, a mechanism similar to the Resolution Trust Corp in the US, to tackle bad loans over the the next four years, but it wants more funds to fight the problem.

During a fund committee meeting Tuesday, the ministry said it wanted to increase the fund to NT$320 billion by continuing to collect a 2 percent business tax on financial institutions until 2011, a ministry statement said. The tax is scheduled to expire in 2006.

The government has used about NT$77.2 billion of the fund to clean up 36 problematic credit cooperatives and small lenders, it said.

This story has been viewed 2999 times.
TOP top