The Action Plan on Non-Performing Loan for Taiwan’s Banking Industry

• Main Authors: Hsiao-hsi Huang, 黃孝熙
• Other Authors: Tsung-Cheng Wu
• Format: Others
• Language: zh-TW
• Published: 2010
• Online Access: http://ndltd.ncl.edu.tw/handle/99899697017579709949

碩士 === 國立臺灣科技大學 === 管理研究所 === 98 === After opening up Taiwan's banking industrial market for establishing new private banks in 10 years, it has been dramatic changes in the overall mode of operation since internal and external environmental changes. In 2000, to legislate the "Financial Holding Company Act", the domestic financial institutions operate more integrated for economies of scale. However, it become derived from a large number of nonperforming loans and a serious erosion of profit due to excessive competition in the domestic financial institutions, Asian financial crisis, domestic financial crisis, network technology bubble, double card crisis and the sub prime mortgage crisis. And all of these can affect the domestic banking industry. Competent authority want to make the banking industry be stronger, it legislate "Financial Six Laws" completely in 2000, includes: Law of setting up the Act for the Establishment and Administration of the Financial Restructuring Fund, the Deposit Insurance Act to amend some provisions, Business Tax Act to amend certain provisions, the Financial Holding Company Act, the Act Governing Bills Finance Business, Insurance Act to amend certain provisions and so on. In the same year in December, it legislate "Financial Institutions Merger Act" so that financial institutions can deal with bad debts and resolve the problem financial institutions according to the law. In July 2002, it pronounced "258 Financial Reform Program", that requires all banks should below 5% in NPL ratio, and higher than 8% or more in required capital adequacy ratio in the two years. Under the guidance of the laws and policies, it accelerated domestic financial institutions to deal with bad debts to adjust their own constitution. Since the second half of last year, the consumer credit defaults increase suddenly resulting in the bad effects, such as the Debtors suicide and the violent debt collection. Adapting to the social problems emerging in endlessly, the Financial Supervisory Commission (FSC) has coordinated the Bankers Association along with all of the Bankers Association’s members to implement the Consumer Finance Unsecured Debt negotiation Mechanism of The Bankers Association of R.O.C. in November 2005.The Debt Negotiation Platform is not only solve the social problems but also cut credit limit of the consumer finance and make the credit policy seriously. The Consumer Debt Resolution Act came into force as from 11 April 2005 providing the resolution to the consumers deal with outstanding loans. In the current years, it develop the diversity business in financial institutions, and the types of non-performing loans are changed generally. Domestic and foreign financial institutions have their commonality and relevance in non-performing loans. We can learn from foreign experience so that banks can heal and return to normal operating system by itself and also avoid becoming a so-called "zombie banks."