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Regulator mulls combining public funds

The financial regulator said yesterday it is considering combining the government's financial restructuring fund and the deposit insurance fund to deal with problematic financial institutions.

The government will have a pool of more than NT$53 billion (US$1.61 billion) at its disposal after combining the NT$40 billion restructuring fund and the NT$13 billion deposit insurance fund, Financial Supervisory Commission chairman Shih Jun-ji (施俊吉) said yesterday.

"The plan is expected to give the government more leeway in managing debt-ridden banks and force those blacklisted lenders to speed up their self-bailout programs for fear of being taken over," Shih said in a question and answer session in the Financial Committee of the Legislative Yuan.

The commission has submitted the plan to the Cabinet for final approval, he said.

There are seven problematic financial institutions, including Taitung Business Bank (台東企銀), Enterprise Bank of Hualien (花蓮企銀) and Bowa Bank (寶華銀行).

As the existing restructuring fund doesn't have enough capital to absorb these problematic institutions, the regulator can encourage them to prepare self-bailout programs, Shih said.

Capital expansion is one such program, which a financial institution is required to undertake if it sees its losses exceed one-third of its net value.
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