The heads of the 35 grassroots financial institutions were forced to turned over management control to 10 major banks yesterday -- prompting large protests in which demonstrators scuffled with police.
But the demonstrators failed in their task of halting a signing ceremony that finalized the handovers.
PHOTO: FANG CHIH-HSIEN, TAIPEI TIMES
Minister of Finance Yen Ching-chang (
PHOTO: FANG CHIH-HSIEN, TAIPEI TIMES
"The average non-performing loan ratio of all grassroots financial institutions is over 18 percent, while the average non-performing loan ratio of the 36 problematic ones is over 30 percent," Yen said. "Some are as high as 50 or 60 percent."
According to the ministry's preliminary estimates, NT$60 billion will be needed to clean up the bad loans and the figure could be higher after the results of a financial examination conducted last month are known.
Yen said that yesterday's move to eliminate troubled financial institutions would save tax payers in the long run.
"There is no point in fighting the takeover action by the banks," Yen said. "Were the problems of the 36 troubled institutions not resolved, it would generate NT$9 billion to NT$10 billion in social costs every year."
Yen made the comments yesterday on a radio program.
The finance minister said that the people opposed to the handovers yesterday were not bank employees, but directors and executives of the financial institutions.
"The reason some local politicians have intervened in the takeover procedures is that these politicians will now be deprived of controlling the troubled co-ops," Yen said.
Yen also dismissed protesters' complaints that the takeovers would lead to job losses, saying that anyone below the rank of deputy manager would keep their jobs and work for healthier institutions.
The finance minister also said that the public should no longer be expected to pay for the co-ops' mistakes.
"Because the credit cooperatives and the farmer's associations couldn't make a profit, their net worth became a black hole. The [future] existence of these institutions would have to be supported by the taxpayer," Yen said. "The earlier we dispose of these problematic institutions, the lower the social costs."
Yen said that co-op staffers should be happy with the intervention.
"The takeovers provide more opportunities for employees since they will feel more competitive [once they are on] the payrolls of strong banks," Yen said. "As a matter of fact, many employees of these grassroots institutions are quite happy."
The Legislative Yuan passed legislation in late June to provide NT$140 billion for the clean-up of troubled financial institutions.
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