Wed, Nov 24, 2004 - Page 10 News List

Two banks face NPL penalties

CREDIT CARDS Chung Shing Bank and Cetelem Bank's Taipei branch may be penalized if they fail to lower credit card NPLs to below a 3 percent cap

By Joyce Huang  /  STAFF REPORTER

Disciplinary action will be taken against Chung Shing Bank (中興銀行) and Cetelem Bank's Taipei branch (法商佳信銀行) if both fail to lower their non-performing loans (NPLs) on credit cards to below 3 percent in three months, an official with the Bureau of Monetary Affairs said yesterday.

Last month, Cetelem's credit-card NPLs jumped to 3.19 percent from September's 2.63 percent while Chung Shing's dropped from September's 10.1 percent to 3.33 percent, according to Jong Huey-jen (鍾慧貞), director-general of the Bureau of Monetary Affairs under the Financial Supervisory Commission.

Jong said that October marked the first month for implementation of the bureau's three-tier mechanism to impose penalties on banks with credit-card NPL ratios above 3 percent, excluding loans under observation.

The new rules require banks with credit card NPL ratios between 3 percent and 5 percent to submit improvement plans. Those with ratios between 5 percent and 8 percent would be admonished and required to rectify the situation within three months, while lenders with ratios topping 8 percent would be forced to suspend issuing new cards.

Jong lauded the decline in the nation's average credit-card NPL ratio to 0.59 percent -- down from 0.62 percent in September, adding that the nation's 53 credit card issuers had released a total of 42.95 million cards up to last month.

A total of NT$108.1 billion was charged to credit cards, with NT$19 billion for cash advances, according to the bureau's statistics.

Moreover, the ratio of bad loans for cash-advance cards also declined from August's 1.389 percent and September's 0.869 percent to 0.837 percent last month, with a total of 35 card issuers granting NT$222.1 billion in small loans.

Both Taiwan Business Bank (台灣中小企銀) and United Bank (聯邦銀行) succeeded in lowering their ratio of cash-advance NPLs to below 3 percent last month.

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