Bank of Taiwan to unload real estate

Bank of Taiwan (台銀), the nation's biggest state-run bank, said yesterday it plans to auction off NT$40.4 billion in idle real estate within the next three years.

"The property sale aims to generate cash in preparation for the bank's write-off of bad loans and its privatization in 2006, as well as to replenish government coffers," the bank's executive vice president Wang Kao-chin (王高津) said at a press conference.

The bank plans to lower its non-performing-loan ratio to below 2 percent by the end of this year, down from 2.54 percent in March, Kao said.

Pending approval from the Ministry of Finance, an auction to sell off the first batch of Taipei-area land, worth NT$4.6 billion on paper, may take place late this year, he said.

The bank intends to sell off properties valued at some NT$11.5 billion next year, another NT$15.7 billion in 2005 and NT$8.6 billion in 2006, Kao said.

The bank has a total of 127 hectares of idle properties with a paper value of NT$66 billion, NT$30 billion of which is located in Taipei.

Kao denied media speculation that most of the bank's residential properties in downtown Taipei are illegally occupied by former high-ranking government officials, including KMT party elder Chen Li-fu (陳立夫) and former Vice President Yen Chia-kan (嚴家淦).

Local Chinese-language media yesterday also reported that the bank was finding it difficult to expel some prominent residents, despite court orders.

But Lin Ping-hung (林炳鴻), a bank official, detailed the status of 296 of the bank's rental properties, which were previously illegally occupied. Before the property sale deal was proposed in February, he said that the bank evicted residents from some 280 rental properties, leaving only 10 unreturned houses in dispute.

"The bank has filed lawsuits against occupants of the 10 houses, who are mostly retired bank employees," Kao said.

The bank's rental properties generate some NT$200 million annually, Lin said.

The bank did not disclose the total number of properties in its possession.

Kao expressed high hopes for the auction.

"The bank expects good returns since the local property market has gradually improved," he said.

But a market watcher said the local property market is still somewhat sluggish.

"Now is a good time to buy, but a bad time to sell," said Billy Yen (顏炳立), general manager of DTZ Debenham Tie Leung International Property Advisers (戴德梁行).

The slower-than-expected economic recovery may further hamper the bank's plans.

Yen said the bank's sale of its huge real-estate holdings "may depress market prices by 10 percent to 20 percent as supply rises."

It's still too early to tell how much the bank's land deals are worth in actual market value. But Yen said that the bank may see at least a 10 percent difference between its assessed value of properties and their actual selling prices.