Pingtung County Government is considering merging the county's 12 community-level cooperatives into one bigger credit unit and hoping the Ministry of Finance will agree to bail them out with the Financial Restructuring Fund (金融重建基金), a county government official said yesterday.
The county has 25 farmers' associations, with only 12 of them boasting established cooperatives that deal with savings and loans on a grassroots-level.
"If the Financial Restructuring Fund's committee agrees to absorb the losses of our cooperatives, we may immediately act to merge the county's 25 farmers' associations into one group," said Huang Jung-long (
Huang said that the move aims to accelerate the county's grassroots financial reform by effectively cleaning up the cooperatives' non-performing loans (NPLs) and strengthening their management with a governmental bail-out plan.
According to Huang, the county government has requested the Ministry of Finance form a special task force to look into financial conditions of the county's 12 cooperatives before facilitating any merger plans.
"As far as we know, net assets of two cooperatives have turned negative, which require a bailout from the government-backed fund," Huang said, refusing to identify the two debt-ridden cooperatives.
Still, the restructuring fund only takes over bankrupted financial institutions.
Therefore, the remaining 10 Pingtung cooperatives may not be entitled to any governmental bailout fund if their assets remain positive, according to the ministry.
But Huang argued that the central government should step in earlier before assets of these credit units further deteriorate and incur more debts on the government coffers.
According to the recently passed Agricultural Financial Law (
Pending a legislative approval to expand its size, the NT$140-billion fund is currently under-capitalized after having spent NT$100 billion on cleaning up the debts of some 40 grassroots financial institutions.
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