Despite NT$2.5 billion (US$80.4 million) in cash on hand, the credit unit of the Shulin Farmers' Association (樹林農會) in Taipei County has suffered a bank run after more than 700 depositors withdrew a total of NT$840 million as of yesterday morning, a government official said.
"NT$140 million was withdrawn through the association's ATMs during the weekend and some NT$700 million was withdrawn before noon," Lai Wu-chi (賴武吉), director-general of the Council of Agriculture's bureau of agricultural finance, said during a telephone interview yesterday.
Lai said the association's credit unit remained in good shape, as most of the loans it had granted were fully collateralized. But worried account holders kept showing up at the credit unit until late in the afternoon.
"I heard about [its alleged financial irregularities] two or three days ago, but was too busy to come. I rushed to withdraw my life savings," a depositor told Unique Satellite TV while waiting for his turn to withdraw money.
To ease yesterday's bank run, association secretary-general Chou Wei-hsien (周維賢) rejected media reports on Friday that said the association's credit unit could suffer losses of NT$4.1 billion after granting sweetheart loans to risky land developers.
"The NT$4.1 billion loan won't become non-performing, as interest payments have not been delayed. Also, the loan only has a balance of NT$2.09 billion," Chou said, adding that the losses to the unit were "minimal."
Lai said the credit unit had a prudent credit policy, which would help it minimize damage from bad loans, although his bureau has identified "some flaws" in the unit's loan-granting procedures.
He also praised the credit unit for being among the top performers in the sector, with a net worth of NT$2.46 billion and a lower-than-average 1.59 percent non-performing loans ratio as of January.
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