The Ministry of Finance is mulling a new plan to "optimize" the use of the Financial Restructuring Fund (
The ministry may use the fund -- similar to the US' Resolution Trust Fund -- to act as a private asset management company (AMCs) to buy off the assets of failing banks, said Tsai Ching-nain (
"After taking over bank shares, the government can further decide the collapsed bank's future by consolidating it through mergers and acquisitions or shutting it down while re-selling its underlying collateral," Tsai said.
According to a preliminary plan, the ministry will use the financial restructuring fund to absorb a bank's bad loans if the bank's non-performing loan (NPL) ratio is too high or its capital adequacy ratio is too low, for example. The ministry is currently working on setting up such a benchmark, Tsai said.
According to existing regulations, banks are required to have a capital adequacy ratio of over 8 percent, Tsai said.
Minister of Finance Lee Yung-san (
Last week, Premier Yu Shyi-kun said the nation is facing a financial crisis because the national debt now exceeds NT$3 trillion (US$90.9 billion). But when asked whether the ministry would work to beef up the NT$140 billion fund in order to facilitate its new plan, Tsai's answers seemed overly-simplistic.
"No government budget may be needed, since capital can be raised through the issuance of government bonds," he replied.
Despite Tsai's optimism, local Chinese-language newspapers have speculated recently that the ministry has proposed raising the fund to NT$600 billion, pending legislative approval.
With the nation's bad loans continuing to increase, Minister Lee has previously told legislators that the fund needs to be raised to NT$600 billion, to help clean up the banking sector.
Chen Chung-hsing (陳松興), president and CEO of the Taiwan Ratings Corp (中華信評), a local partner of Standard & Poor's Ratings Services, on Monday said that the government may need as much as NT$950 billion to clean up the nation's NT$1.68 trillion in NPLs.
Chen said that Taiwan's ratio of NPLs is likely to have climbed above 15 percent and NT$950 billion -- 10 percent of the nation's NT$9.5 trillion gross domestic product (GDP) -- is a minimum to tackle bad loans.
Citing reports from the World Bank, Chen said that it usually costs 12.8 percent of a nation's GDP to help write off bad loans and "the more it is delayed, the costlier it will be."
Rebutting Chen's view, the ministry's Tsai said that the nation's ratio of non-performing loans currently stands at 12.3 percent, in accordance with international accounting standards.
And since last December, sour loans under observation have declined by NT$54 billion as of the end of May, he said, adding that the upcoming economic recovery may prop up the nation's property market and revive the nation's economic outlook.
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
ADVERSARIES: The new list includes 11 entities in China and one in Taiwan, which is a local branch of Chinese cloud computing firm Inspur Group The US added dozens of entities to a trade blacklist on Tuesday, the US Department of Commerce said, in part to disrupt Beijing’s artificial intelligence (AI) and advanced computing capabilities. The action affects 80 entities from countries including China, the United Arab Emirates and Iran, with the commerce department citing their “activities contrary to US national security and foreign policy.” Those added to the “entity list” are restricted from obtaining US items and technologies without government authorization. “We will not allow adversaries to exploit American technology to bolster their own militaries and threaten American lives,” US Secretary of Commerce Howard Lutnick said. The entities
Minister of Finance Chuang Tsui-yun (莊翠雲) yesterday told lawmakers that she “would not speculate,” but a “response plan” has been prepared in case Taiwan is targeted by US President Donald Trump’s reciprocal tariffs, which are to be announced on Wednesday next week. The Trump administration, including US Secretary of the Treasury Scott Bessent, has said that much of the proposed reciprocal tariffs would focus on the 15 countries that have the highest trade surpluses with the US. Bessent has referred to those countries as the “dirty 15,” but has not named them. Last year, Taiwan’s US$73.9 billion trade surplus with the US
Prices of gasoline and diesel products at domestic gas stations are to fall NT$0.2 and NT$0.1 per liter respectively this week, even though international crude oil prices rose last week, CPC Corp, Taiwan (台灣中油) and Formosa Petrochemical Corp (台塑石化) said yesterday. International crude oil prices continued rising last week, as the US Energy Information Administration reported a larger-than-expected drop in US commercial crude oil inventories, CPC said in a statement. Based on the company’s floating oil price formula, the cost of crude oil rose 2.38 percent last week from a week earlier, it said. News that US President Donald Trump plans a “secondary
RSS