Watchdog takes over failing banks

PUBLISHED : Sunday, 07 January, 2007, 12:00am
UPDATED : Sunday, 07 January, 2007, 12:00am

Taiwan's financial regulator has moved to take charge of two failing private banks.

The chairman of the island's Financial Supervisory Commission, Shih Jun-ji, said his agency had set aside at least NT$20 billion (HK$4.76 billion) in cash for withdrawals by depositors at The Chinese Bank - one of the two affected banks - tomorrow, the Central News Agency reported yesterday.

'The Chinese Bank has become a state-owned bank ... the government will spare no effort to secure every dollar,' Mr Shih said.

The agency said Mr Shih had said the commission had taken over the management of The Chinese Bank from yesterday and would also take over the loss-making Enterprise Bank of Hualien today.

Thousands of depositors swarmed into branches of The Chinese Bank on Friday after other subsidiaries of its parent company, Rebar Group, filed for debt reconstruction.

The commission said depositors had withdrawn more than NT$15 billion on Friday and the government would boost staffing at the two banks tomorrow to manage an expected upsurge in withdrawals.

Mr Shih denied that Taiwan was facing a financial crisis: 'The landmine [of withdrawals] was detonated. The commission has switched on its crisis management and I would like to tell you that our financial system is doing very well,' he said.

Local media said four other banks with low profits and a high number of non-performing loans were also on the commission's watch list.