First Commercial Bank (
The lender sold NT$33.4 billion of bad loans to Lone Star Asia-Pacific Ltd, NT$15.9 billion's worth to GE Capital Commercial Finance Inc, and NT$7.2 billion's worth to Taiwan Assets Management Co (台灣金聯), it said in the statement.
Due to non-disclosure agreements between the bank and the buyers, PricewaterhouseCoopers LLP, who manage the bad-loan sales for First Commercial, didn't disclose the prices paid for the loans.
Though PricewaterhouseCoopers also declined to reveal how many potential buyers competed in the auction, a source at the bank told the <
This was the second auction that the bank has held to dispose of its problem assets. With its first auction in March it sold off NT$13.2 billion of bad loans to Cerberus Asia Capital Management LLC. In April it sold US$131 million of loans to Lehman Brothers Holdings Inc. This means that First Commercial has so far sold a total of NT$70 billion of bad loans in an effort to clean its balance sheet.
Earlier this month, the bank said it hoped to cut its non-performing loan ratio to below 4 percent by the end of this year from 6.94 percent at the end of June through efforts to dispose of its bad loans.
"It appears demand for the bad loans was quite hot, so prices won't have been too low, so this is good news," said Parker Wu, who helps manage NT$700 million in Taiwan stocks at Shinkong Investment Trust Co (新光投信). "Profitability will start to improve from next year, because the bank won't have to set aside so many provisions in future."
Last year's recession, the worst in half a century, sent bad-loan levels soaring and Taiwan's banks are now trying to clean their balance sheets so they can extend new loans.
"This year's bad-loan sales, which already total more than NT$70 billion, will help to cut our non-performing loan ratio, improve operating systems, and boost our core business and profitability," First Commercial said in a statement.
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