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Sat, Jan 13, 2001 - Page 18 News List

New firm to target ailing co-ops

BAD LOANS The finance ministry plans to use Taiwan's first financial assets services company to help clean up more than 20 problematic credit co-ops

By Stanley Chou  /  STAFF REPORTER

The first task of the first financial assets service company (FASC, 金融資產服務公司) will be to clean up over 20 credit cooperatives with negative net worth, said Lee Yon-san (李庸三) Thursday.

The finance ministry's newly formed FASC is to be the only official organization to do bidding on behalf of the government.

The key initial role -- to clean up over 20 problematic credit cooperatives under the farmer and fisherman's association -- will be carried out by order of the finance ministry.

"A major task of the FASC will be to accept authorization from government agencies to execute asset transfers from certain financial institutions," said Lee.

FASCs will do so by intially taking over problematic co-ops, confiscating their assets, setting fair market prices for their collatoral and finalizing the process by auctioning off the assets to AMCs.

"Currently, the finance ministry is studying how to release, by force, certain problematic assets held by domestic financial institutions and transfer those assets to established FASCs and asset management companies (AMC, 資產管理公司) certified by the ministry for public auctioning and disposal," said Lee. Lee declined to disclose the names of the problematic financial institutions.

According to Article 13 of the Financial Institutions Merger Law (金融機構合併法), when the financial status of a farmer and fisherman's association's credit cooperative has deteriorated, including defaulting on debt and having a negative net worth, the ministry can suspend the duty of its directors and executives. When necessary, the ministry can order the credit cooperative to transfer its assets to banks designated by the ministry.

This means that assets of more than 20 farmer and fisherman's associations' credit cooperatives, which have negative net worths according to a recent calculation by the ministry and Central Depository Insurance Company (CDIC, 中央存保), would have to be transferred to banks by force if necessary.

The task of the transfer would be executed by the FASC, which would be working under the authority of the ministry. According the ministry, the overdue loans of farmer and fisherman's associations' credit cooperatives was NT$197 billion, with an average overdue loan ratio of 15.56 percent, according to the ministry. Finance ministry officials said the problematic assets derived from the overdue loans would be processed this year.

"Since the administration does not currently have the budget to establish a resolution trust company (RTC), which would undertake the loss, to dispose of the collateral as soon as possible is the only way to go for now.

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