Chang Hwa tops list of banks hit by loan defaults

State-run Chang Hwa Bank (彰化銀行) incurred the highest amount of bad debts among the nation's lenders as of the end of last year, statistics released yesterday showed.

It posted bad debts amounting to NT$50.8 billion (US$1.5 billion), as 185 account holders -- each with a debt of over NT$100 million -- defaulted.

FSC request

As required by the Financial Supervisory Commission (FSC), 42 local banks and 33 foreign lenders had to make public on their Web sites by yesterday the names of their major defaulters with loans exceeding NT$100 million as registered at the end of December.

The FSC did not provide the total amount of bad loans as the financial institutions were still verifying the figures, deputy director general of the FSC's Banking Bureau Jong Huey-jen (鍾慧貞) said.

The banks identified bad debt account holders with loans incurred as of June last year for the first time in mid-March.

At that time, FSC data showed that the total amount of bad debts was NT$370 billion.

No more than 1,500 accounts shared by the 75 local and foreign lenders were shown to be in default.

Worst-hit

The banks' second release on Sunday and yesterday showed that state-controlled lenders were among the worst hit during the loans crisis.

Mega International Commercial Bank (兆豐國際商銀) reported bad debts of NT$35.4 billion, with 103 default accounts.

Mega International's figures were a combination of its predecessors, China International Commercial Bank (中國國際商銀) and Chiao Tung Bank (交通銀行), which merged last year.

It was followed by the nation's largest lender, the Bank of Taiwan (台灣銀行), which disclosed 97 bad loan accounts totaling NT$31.3 billion, and Taiwan Business Bank (台灣企銀), with 101 account holders incurring debts of NT$22.7 billion.

The most prominent defaulters included An Feng Steel (安鋒鋼鐵) and Feng An Metal Co (峰安金屬), businesses run by former Control Yuan member Chu An-hsiung (朱安雄).

Former Tuntex Group (東帝士集團) chairman Chen Yu-hao (陳由豪), Chinese Automobile Co (國產汽車), Ever Fortune Industrial Co (長億實業) and Yue-Mei International Development Corp (月眉國際開發) were also among the debtors.

Questions

Despite the banks' efforts to identify indebted customers, Chinese Nationalist Party (KMT) Lawmaker Lai Shyh-bao (賴士葆) yesterday morning asked what the FSC intended to do about the many indebted business operators who have fled overseas.

FSC Chairman Hu Sheng-cheng (胡勝正) replied at the legislature's Finance Committee that the FSC would work with the Bankers Association of the Republic of China (銀行公會) to suggest that the commission instruct their biggest creditor banks to collect debts in a bid to reduce costs and raise efficiency.

Considering the massive amount of joint debts, the success rate of debt collection would be greatly boosted if reward incentives were provided, he told lawmakers.