Taiwan's seven biggest banks have come up with a new way of treating their bad loans: They're keeping quiet about them.
The Bank of Taiwan (台灣銀行), Taiwan Cooperative Bank (合作金庫) and five other state-controlled lenders agreed to halt their monthly disclosure of bad loan levels, amid concern they may panic the public, officials at two of the banks said.
The banks will now report the numbers quarterly -- as required by the finance ministry and central bank.
"Unfavorable numbers can cause the public to panic, so the new reporting plan will reduce media publicity about bad loans and pacify investors," said Taiwan Cooperative Bank section chief Lien Ming-yu, confirming an earlier report in the Chinese language press.
The move comes as investors grow increasingly concerned about Taiwan banks' ability to tackle bad loans, which are on the rise due to a slowing economy, a weak property market and a fall in demand for the country's technology-related exports.
"Taiwan's government is back-peddling on its pledge to improve transparency in the banking industry," said Lin Tsui-pin (林翠萍), a manager at Prudential Securities Investment Trust Co (保誠投信), which manages NT$45 billion (US$1.4 billion) OTC fund (掌櫃基金) in Taiwan. "The decision to scrap monthly reports will only fuel more rumors in the market."
The seven banks, including Chang Hwa Commercial Bank (
The move could rattle investors' confidence in Taiwan financial shares, which as a group rose 19 percent this year after falling 30 percent in 2000.
The Ministry of Finance was unavailable for immediate comment, though on Dec. 5 Minister of Finance Yen Ching-chang(顏慶章) said the media was overstating the nations's bad loan difficulties.
"The overdue loan problem is not so serious," Yen said at the time. "Don't try to scare yourselves."
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