Bank, GE join forces to set up AMC

Bank of Overseas Chinese (華僑銀行) said it's teaming up with GE Capital Corp, the largest non-bank financial company, to start an asset management company to help the mid-sized Taiwanese lender deal with its bad loans.

The venture, announced by Bank of Overseas Chinese Chairman Dai Li-ning (戴立寧) at a press conference in Taipei, is the latest in a series of joint venture asset management companies set up with foreign companies as the island's lenders move to clean up their balance sheets.

"The exact numbers haven't been determined," Dai said. "GE Capital will send a group to do due diligence -- hopefully by the end of this year the AMC will be established." Morgan Stanley Dean Witter & Co has teamed up with China Development Industrial Bank (中華開發工銀) to form an asset management company, while Goldman Sachs Group Inc and Lehman Brothers Holdings Inc has also said it will form AMCs in the island.

The Bank of Overseas Chinese-GE venture will initially be aimed at taking as much as NT$30 billion ($910 million) of bad loans from the bank's balance sheet, though it may later move into bad loan management for other Taiwanese banks, Dai said.

Non-performing loans made up 16 percent of total loans at the 40-year-old Bank of Overseas Chinese at the end of the first quarter of 2000, according to the lender. That was more than double the industry's official level of just under 6 percent.

The bank has more than 50 branches throughout the country and in the first three months of 2001 lost NT$661 million (US$20 million), compared with a profit of NT$159 million for the same period last year.