Minister proposes capital injections

Minister of Finance Lee Yung-san (李庸三) yesterday said newly proposed injections of capital into the Financial Restructuring Fund (金融重建基金) would be used to take over more than 100 troubled financial institutions whose assets may soon turn negative.

"Most of them are grassroots financial institutions," Lee told the legislature's finance committee yesterday morning.

In response to KMT Legislator Lee Chia-chin's (李嘉進) interpellation, Lee reiterated that the fund should be raised to NT$1.05 trillion, NT$300 billion of which will be used to restructure ill-fated credit units of farmers' and fishermen's associations. The remaining NT$600 billion will be used to buy up the nation's non-performing loans, he added.

Lee also said that less than NT$100 billion from the fund will be used to bail out two debt-ridden banks -- Chung Shing Commercial Bank (中興銀行) and the Bank of Kaohsiung (高雄企銀).

The Control Yuan, last week, censured the finance ministry for its mismanagement in the Chung Shing affair, but Lee yesterday said that his ministry has done everything it can to implement a bank take over and has held numerous auctions to try to sell it off.

Due to legal complications, the government's takeover, however, was delayed for over a year after a run on the bank over two years ago, he said.

The government will continue to negotiate with potential buyers of Chung Shing, which is currently under the stewardship of the Land Bank of Taiwan (土地銀行), the banker-turn-minister said.

Meanwhile, both PFP legislators Norman Yin (殷乃平) and Chou Hsi-wei (周錫瑋) yesterday raised concerns over possible financial threats to be triggered by the nation's insurance companies.

Yin said that many of the nation's life insurence providers are facing dire financial difficulties while Chou said that 24 insurers are on the brink of bankruptcy since interest rate cuts have reduced their incomes while lending risks are increasing.

Lee, in response, said the government has no plans of establishing governmental restructuring funds to deal the issue except urging insurers to raise capital adequacy.