Finance minister wants to reduce bad-loan ratios

Minister of Finance Lee Yuan-san (李庸三), on Monday, vowed to lower the nation's ratio of non-performing loans (NPL) from the current 8.78 percent to 4 percent within two years -- one percentage point lower than the goal he had previously announced.

Lee told the legislature's finance committee that by the year's end, NT$300 billion in bad loans will be written off, of which five state-run banks, including the Bank of Taiwan (台銀), will release subordinated debenture bonds (次順位債券) to bridge the capital adequacy gap.

In the event of bankruptcy, subordinated debt holders receive payment only after senior debt claims are paid in full.

The committee also approved the ministry's proposal to boost the government's Financial Restructuring Fund from a base of NT$140 billion to NT$180 billion.