The Executive Yuan yesterday approved the draft amendments to the statute regarding the establishment and management of the financial reconstruction fund (行政院金融重建基金設置及管理條例) which would raise the fund to NT$1.05 trillion.
If the bill passes into law, the government hopes to see the non-performing loans (NPL) ratio reduced to 5 percent and the capital-adequacy ratio raised to 8 percent within two years.
Statistics show that the rate of non-performing loans reached 8.2 percent in June, excluding loans under observation. Although no change is made this time on the punishment of financial criminals, the government hopes to amend the Banking Law and Criminal Code in future to make the punishments more severe.
Currently, those who steal a financial institution's assets face a sentence of between three to 10 years in prison, according to the statute.
Addressing the press conference held after the weekly Cabinet meeting yesterday morning, Cabinet Secretary-General Liu Shih-fang (
"I'm afraid if we don't do it today, we'll have to pay a higher price tomorrow," Liu quoted Vice Premier Lin Hsin-yi (
"A delay in the clean-up of the nation's NPL problem will cause a more serious problem that will hinder the nation's long-term economic growth," Liu said.
According to Minister of Finance Lee Yung-san (
Since NT$600 billion of the fund would be used to buy up the nation's non-performing loans, the remaining NT$300 billion would be used to restructure ill-fated credit units of farmers' and fishermen's associations, according to Lee.
The fund would also be allowed to purchase troubled banks' impaired assets for re-sale or put down investment in exchange for banks' swap shares should their capital-adequacy ratio fall below of 8 percent.
By taking a stake in the banks, Lee said that the government would be empowered to take the initiative in facilitating mergers and acquisitions among banks. that would maximize the banking sector's economies of scale and solve the nation's problem of an over-saturated banking market.
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