Within one month, state-run Taiwan Cooperative Bank (合作金庫) and Land Bank of Taiwan (土銀) will take over seven grassroots financial institutions whose assets, the Ministry of Finance concluded last Friday, will soon turn negative, bank officials said yesterday.
"In compliance with government policies, Cooperative Bank will take over three of the troubled units while Land Bank will take over four," said David Wang (
Wang added that the three institutions Cooperative will assume control over are the credit units of the Shengang Township Farmers' Association (神岡鄉農會) in Taichung County, the Changhwa City Farmers' Association (彰化市農會) and the Fuhsin Township Farmers' Association (福星鄉農會) in Changhwa County.
Under the supervision of the Central Deposit Insurance Corp (CDIC, 中央存保公司), officials of the two banks have dispatched their own people along with two independent accountants to review the books of the seven seized cooperatives before the government's Financial Restructuring Fund (金融重建基金) finalizes plans to cover their losses.
The government expects to pay out some NT$10 billion to cover the bad loans when the bookkeeping examinations are over, which is slated to take up to three weeks, according to local media.
PFP legislator Norman Yin (
He also expressed concern over the seized cooperatives' future burden on the two state-run banks, saying "more hidden bad loans may arise to damage the performance of the two banks after the takeover."
After last Friday's seizure, board members of the seven cooperatives were further restricted from leaving the country and their bank accounts were frozen pending further investigations into possible moral hazards.
On Monday, 12 board members of the credit unit of the Tashu Township Farmers' Association (大樹鄉農會) in Kaohsiung County criticized the finance ministry's takeover, saying "our human rights were severely damaged after the ministry's unilateral move ..."
"The cooperative is not in the red," Chang Ching-jung (
Chang added that the board has commissioned lawyers to file an administrative and a civil lawsuit against the Ministry of Finance within two days for negligence.
Chang, however, yesterday admitted that the Tashu cooperative currently has a non-performing loan ratio of over 50 percent, excluding those loans under observation.
With some 50 staff, the cooperative has NT$900 million in loans and NT$3 billion in deposits, he added.
Yin shrugged off the farmers association's move, saying the ministry was authorized in its action.
However, CDIC President Chen Chang-sang (
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