The Ministry of Finance will work to sell off debt-ridden Chung Shing Bank (中興銀行) in the next six months, the head of the ministry told lawmakers yesterday.
The ministry will like to sell all of the bank's assets at once but, if it can't, it may break the bank into different businesses for sale, Minister of Finance Lee Yung-san (李庸三) said without elaborating.
Lee made the remarks yesterday while speaking at a legislature finance subcommittee meeting. He said two foreign asset management companies and some Taiwan banks had contacted the ministry expressing an interest in taking over Chung Shing.
"The finance ministry will try as hard as we can to arrange financial institutions to take over Chung Shing," Lee said. "We hope we will solve the issue in six months."
Chung Shing, which is sitting on approximately NT$40 billion in bad loans, is currently under the management of the Central Deposit Insurance Corp (中央存保). The state-run Central Deposit took control of the ailing bank two years ago at the ministry's instruction and is now managing it under financial-restructuring-fund regulations, a mechanism similar to the Resolution Trust Corp in the US.
In January the ministry tried to sell the bank through public bidding, with little interest from potential buyers.
At the subcommittee meeting several lawmakers said they were concerned about the use of the financial restructuring fund to bail out problem banks.
KMT legislator Lee Chia-chin (李嘉進) said it was unfair to use taxpayers' money to aid problem banks because the government's financial restructuring fund was collected from the two-percent business tax levied on financial institutions.
In response, Lee said his ministry would like to bring an end to the idea that the government won't allow a problem bank to collapse. But to achieve this goal, the ministry must communicate more with the public [to avoid bad news that may trigger a bank run], he said.
Earlier yesterday, Central Deposit also announced that it will auction off the money-losing Medium Business Bank of Kaohsiung (高雄企銀).
By the ministry's order Central Deposit began to manage the Kaohsiung bank five months after the bank failed to sell NT$5.5 billion (US$157 million) of its shares in a sale designed to boost its capital.