"We don't ask banks to extend loans to [just] any enterprises," said Gary Tseng, deputy director general of the finance ministry's bureau of monetary affairs.
Yet textile-maker Hualon is in an industry that's seeing a slump in business, as are the construction and technology industries. Rival Tuntex Distinct Corp (東雲紡織), the textile-making arm of the Tuntex Group, in May sought court protection from creditors seeking repayment of NT$29 billion.
"Business leaders" are putting pressure on banks to extend credit to companies that are suffering as the island's economy slows, Chinatrust's Wang said.
CBC Governor Perng Fai-nan (
Total lending by Taiwan banks to private enterprises rose 0.6 percent to NT$63.87 trillion in the year to May 31, according to the central bank. The government wants 4 percent loan growth this year, Tseng said.
The government says less than 6 percent of loans are non-performing, though CSFB says they could be as much as 13 percent of all credit. Goldman Sachs Group Inc estimates they could be as much as 15 percent.
Since the key TAIEX's year high on Feb. 15, the TWSE Bank and Insurance Index has fallen 25 percent this year, compared to a 20 percent drop on the TAIEX.
"As the tide goes out in Taiwan we'll see who's swimming naked," said Christian Dangerfield, chief investment officer at AIB Govett Asia Ltd.
RSS