The Chinese government is considering its second bailout of Industrial & Commercial Bank of China and its rivals in four years, as bad loans equal to at least a quarter of credits block their fundraising plans.
Policy makers have discussed transferring capital to banks, said Li Fu-an, deputy head of the People's Bank of China's bank management department. The government's annual financial conference last week also debated a plan to set up a special agency to oversee banks.
The central bank has told banks to reduce non-performing loans by 2006, when they'll be exposed to unfettered competition from overseas banks such as HSBC Holdings Plc and Citigroup Inc.
Goldman Sachs Group Inc estimates that for banks to become competitive and to attract investors, it could cost 2.4 trillion yuan (US$290 billion) in new capital and bad-loan transfers.
"We'd like the banks to have a big capital injection and then privatize next year," said Jonathan Anderson, head of Asia-Pacific economic research at Goldman and former China representative for the International Monetary Fund. "If you want to go the whole hog, it could cost 3 trillion" yuan for banks to meet international standards.
The government says about a quarter of advances at the top four lenders are non-performing. Moody's Investors Service says as much as 45 percent of the top four banks' 7.9 trillion yuan of loans may go bad, or US$430 billion. That's almost as much as the ?52.4 trillion (US$442 billion) of Japanese loans that were certified non-performing last March. Many more borrowers have stopped paying debt since then.
In Japan, the region's biggest economy, bad loans have stifled growth for the past decade. China needs to clean up dud credits if they're not to also choke the No. 2 Asian economy, which expanded 8 percent last year.
To meet the government's target of reducing loans by 2006 "it is likely that some form of government intervention will be necessary," Standard & Poor's said last week. That "could possibly be through injections of fresh capital or through further transfers of NPLs."
Like Japan's banks, China's top four lenders were bailed out in 1999, receiving 270 billion yuan as they shifted 1.4 trillion yuan of loans to asset management firms.
The lenders, including Bank of China, Agricultural Bank of China and China Construction Bank, have since seen more loans go bad as the government cuts support for state-owned companies.
LEVERAGE: China did not ‘need to fire a shot’ to deny Taiwan airspace over Africa when it owns ‘half the continent’s debt,’ a US official said, calling it economic warfare The EU has raised concerns about overflight rights following the delay of President William Lai’s (賴清德) planned state visit to the Kingdom of Eswatini after three African nations denied overflight clearance for his charter at the last minute. Taiwanese allies Paraguay and Saint Kitts and Nevis, as well as several US lawmakers and the Inter-Parliamentary Alliance on China (IPAC) condemned China for allegedly pressuring the countries. Lai was scheduled to fly directly to Taiwan’s only African ally from yesterday to Sunday to celebrate the 40th anniversary of King Mswati III’s accession and his 58th birthday, but Seychelles, Mauritius and Madagascar suddenly revoked
The final batch of 28 M1A2T Abrams tanks purchased from the US arrived at Taipei Port last night and were transported to the Armor Training Command in Hsinchu County’s Hukou Township (湖口), completing the military’s multi-year procurement of 108 of the tanks. Starting at 12:10am today, reporters observed more than a dozen civilian flatbed trailers departing from Taipei Port, each carrying an M1A2T tank covered with black waterproof tarps. Escorted by military vehicles, the convoy traveled via the West Coast Expressway to the Armor Training Command, with police implementing traffic control. The army operates about 1,000 tanks, including CM-11 Brave Tiger
China on Wednesday teased in a video an aircraft carrier that could be its fourth, and the first using nuclear power, while making an allusion to Taiwan and vowing to further build up its islands, as it looks to boost maritime power, secure resources and bolster territorial claims. The video, issued on the eve of the 77th founding anniversary of the Chinese People’s Liberation Army Navy, featured fictional officers with names that are homophones of three commissioned aircraft carriers, the Liaoning (遼寧), Shandong (山東) and Fujian (福建). Titled Into the Deep, it showed a 19-year-old named “Hejian” (何劍) joining the group, sparking
BIG YEAR: The company said it would also release its A12 chip the same year to keep a ‘reliable stream of new silicon technologies’ flowing to its customers Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday said its newest A13 chip is to enter volume production in 2029 as the chipmaker seeks to hold onto its tech leadership and demand for next-generation chips used in artificial intelligence (AI), high-performance-computing (HPC) and mobile applications. TSMC, the world’s biggest contract chipmaker, also unveiled its A12 chip at its annual technology symposium in Santa Clara, California. The A12 chip, which features TSMC’s super-power-rail technology to provide backside power delivery for AI and HPC applications, is also to enter volume production in 2029, a year after the scheduled release of the A14 chip. The technology moves
RSS