The China Development Industrial Bank (
The two parties would sign a memorandum of understanding for the joint venture shortly as they are now in the process of adding final touches to the document, the bank said.
China Development will hold a 30 percent stake in the venture and Morgan Stanley 70 percent, the report said.
The new venture's initial capital for purchasing banks' bad assets was set at NT$20 billion (US$607.7 million), it said.
It will be the second AMC to be set up in Taiwan following a joint venture between Taiwan's Chinatrust Commercial Bank and Goldman Sachs.
An AMC takes over and manages bad debts for financial institutions. The government has encouraged companies and financial institutions to set up AMCs to manage bad debts, mostly through auctions.
The details of the asset management company were announced at a briefing for institutional investors, at which the bank formally announced after-tax first-quarter earnings of NT$5.424 billion, translating to earnings per share of NT$0.84.
The bank expects after-tax earnings for 2001 in full to reach NT$16.229 billion.
The overall non-performing loan (NPL) ratio reached 5.34 percent by the end of December from 4.88 percent a year earlier.
A total of NT$773.5 billion (US$23.5 billion) of NPLs were recorded from 53 domestic banks at the end of last year.
The NPL ratio was down 0.02 percentage points in December from that in September.
The sum excluded grassroots financial institutions, which are believed to have some of the worst problem loans.
A local Chinese-language newspaper said yesterday that the combined NPLs hit a new record for seven leading domestic banks, totalling NT$412.6 billion, or more than six percent by the end of March.
Taiwan banks need to clean up bad loans as they embark on government-led mergers to create fewer, stronger banking groups in an island home to more than 300 lenders. The government says about one in every eight loans are bad, a figure analysts say underestimates the situation by half.
Alarm about bad debt is one reason the key TWSE index lost two-fifths of its value last year. The stock market's slide, in turn, sparked more defaults among individual investors who conduct 80 percent of daily trading, often with borrowed money.
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