The government’s decision to have government-invested banks tighten their lending to Ting Hsin International Group (頂新國際集團) might cause privately owned banks to follow suit, which could lead to the bankruptcy of the conglomerate and loss of jobs for its workers, experts said on Saturday.
Ting Hsin is accused of selling cooking oils mixed with animal feed-grade fats, which sparked a food scare and widespread outrage in the nation.
The Ministry of Finance has imposed sanctions on the enterprise, saying government-invested banks are set to tighten their lending policy toward Ting Hsin, refusing to renew its loan contracts, increasing the guarantees for collateral loans, raising interest rates and rejecting new loan applications.
China University of Technology’s College of Business chairman Ray Dawn (董瑞斌) said the government measures are aimed at forcing Ting Hsin to remit its overseas capital back to Taiwan, given that most of the firm’s investments in the nation are funded by loans from domestic banks.
However, he said that if privately owned banks follow the example of government-invested banks and reduce their loans to Ting Hsin, the business group might abandon the Taiwanese market and declare bankruptcy or insolvency.
Agreeing with Tung, Jepun Financial Service Group (捷鵬國際金融) deputy chief executive officer Louis Lee (李智仁) said the Ting Hsin incident has led many banks to tighten their criteria for corporate borrowers.
For example, some banks now have a requirement that borrowers must fulfill their corporate social responsibility, Lee said.
This means that the banks now have to re-examine their loans to big companies, which could cause a snowball effect, he said.
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