China may inject US$40 billion into Industrial and Commercial Bank of China, the nation's biggest lender, as it accelerates a program to help state banks reduce bad loans before selling shares to the public.
Industrial Bank would be the third lender to receive a bailout after the government last month pumped US$45 billion into Bank of China and China Construction Bank, China <
The government plans to use US$120 billion from its foreign reserves to shore up the four biggest state banks, Business Post said. The four, which have bad loans estimated by the government at more than a fifth of total lending, face stiffer competition as China opens the industry to overseas competition.
"The banking system is a big burden on economic reform," said Joseph Lau, chief investment officer at Tai Fook Asset Management Ltd in Hong Kong. "If the system isn't cleaned up, problem lending will carry on and ultimately bankrupt the government."
The big four, including Agricultural Bank of China, have bad loans estimated at US$400 billion, a legacy of poor management and five decades of government-directed lending to unprofitable state companies. Premier Wen Jiabao said last month that the government will inject more money into the four within six months to help them reduce bad loans and prepare for share sales.
The government injected US$22.5 billion each into Bank of China and Construction Bank, the second and third-biggest lenders, at the end of last year, the banks said last week.
Construction Bank is discussing a US$5 billion initial share sale this year and Bank of China targets a sale in 2005.
"The government hasn't started discussing the bailout for the Industrial Bank," said Li, a member of the central bank's monetary policy committee.
Industrial Bank, Bank of China, Construction Bank and Agricultural Bank between them control about US$1.7 trillion of assets and account for 70 percent of all lending.
Standard & Poor's estimated the bad-loan ratio for China's financial industry as a whole at about 45 percent as of the end of June, more than double the government figure. Merrill Lynch estimated the cost of bailing out the big four at US$250 billion.
Industrial Bank said yesterday it cut its non-performiung loan ratio to 21.3 percent of total lending at the end of last year, from 25.5 percent a year earlier. The bank spent 60 billion yuan writing off bad loans last year, up from 38.1 billion 2002, prompting a 66 percent drop in the bank's 2003 pretax profit to 2.1 billion yuan.
The bank has a higher bad-loan ratio than its two nearest rivals. Construction Bank cut bad loans by 19.6 billion yuan in the first half of last year to 12.9 percent and said it aimed to reduce the ratio to 10 percent by year's end.
Bank of China, the country's oldest lender, said non-performing loans were equal to 17.98 percent of total lending at the end of October.
Industrial Bank has said it aims to cut its bad-loan ratio to 10 percent by 2006 before selling shares.
The bank said its total lending rose by 391.1 billion yuan, or 13 percent, last year as people borrowed more to buy cars, homes and computers in the world's fastest-growing major economy.
China's economy, the world's sixth-largest, grew 9.1 percent in the third quarter, faster than any of the other 10 biggest economies.
Exports rose 40 percent last year, helping to swell the country's foreign-exchange reserves to a record US$403 billion as of the end of December.
SEEKING CLARITY: Washington should not adopt measures that create uncertainties for ‘existing semiconductor investments,’ TSMC said referring to its US$165 billion in the US Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) told the US that any future tariffs on Taiwanese semiconductors could reduce demand for chips and derail its pledge to increase its investment in Arizona. “New import restrictions could jeopardize current US leadership in the competitive technology industry and create uncertainties for many committed semiconductor capital projects in the US, including TSMC Arizona’s significant investment plan in Phoenix,” the chipmaker wrote in a letter to the US Department of Commerce. TSMC issued the warning in response to a solicitation for comments by the department on a possible tariff on semiconductor imports by US President Donald Trump’s
The government has launched a three-pronged strategy to attract local and international talent, aiming to position Taiwan as a new global hub following Nvidia Corp’s announcement that it has chosen Taipei as the site of its Taiwan headquarters. Nvidia cofounder and CEO Jensen Huang (黃仁勳) on Monday last week announced during his keynote speech at the Computex trade show in Taipei that the Nvidia Constellation, the company’s planned Taiwan headquarters, would be located in the Beitou-Shilin Technology Park (北投士林科技園區) in Taipei. Huang’s decision to establish a base in Taiwan is “primarily due to Taiwan’s talent pool and its strength in the semiconductor
An earnings report from semiconductor giant and artificial intelligence (AI) bellwether Nvidia Corp takes center stage for Wall Street this week, as stocks hit a speed bump of worries over US federal deficits driving up Treasury yields. US equities pulled back last week after a torrid rally, as investors turned their attention to tax and spending legislation poised to swell the US government’s US$36 trillion in debt. Long-dated US Treasury yields rose amid the fiscal worries, with the 30-year yield topping 5 percent and hitting its highest level since late 2023. Stocks were dealt another blow on Friday when US President Donald
UNCERTAINTY: Investors remain worried that trade negotiations with Washington could go poorly, given Trump’s inconsistency on tariffs in his second term, experts said The consumer confidence index this month fell for a ninth consecutive month to its lowest level in 13 months, as global trade uncertainties and tariff risks cloud Taiwan’s economic outlook, a survey released yesterday by National Central University found. The biggest decline came from the timing for stock investments, which plunged 11.82 points to 26.82, underscoring bleak investor confidence, it said. “Although the TAIEX reclaimed the 21,000-point mark after the US and China agreed to bury the hatchet for 90 days, investors remain worried that the situation would turn sour later,” said Dachrahn Wu (吳大任), director of the university’s Research Center for
RSS