Insolvency Reform A Chinese Taipei Perspective
Sherri CHUANG
Ministry of Finance
Chinese Taipei
Current Banking NPL Problem
NPL ratio
Fist NPL bulk sale to
AMC
15.0
AMC mechanism
established
12500
The rate of deposit reserve
& business tax decreased
to write off NPL
10,747
10,211
10,073
10000
8,833
7,303
7.5
6.8
5,105
5.0
5.7
3,515
7500
8.2
5,865
6.2
6.4
5000
4.9
4.2
2.5
15000
13,274
12.5
10.0
NPL amount
4.2
2500
3.0
0.0
0
1995
1996
1997
1998
1999
2000
2001
2002
2003II
MOF Efforts
• Target: NPL Ratio < 5%
• Actions
– Requiring write off NPLs
– Providing the incentive
– Facilitating AMC mechanism
• US $9 billion NPL sold to AMC till Oct 2003
• Issue:latest NPL ratio of 6.4% is still high
compared to healthy counterparts
Development of Informal Workouts
• Current Moratoriums Between Banking Creditors &
Debtors
• MOF involved from 1998 till 2001
• Negotiation mechanism under the Bankers Association after Nov 2001
• Planning to include AMC into the mechanism
• Drafting Rescue Law
•
•
•
•
Firm’s value evaluated by appraisal committee
Joint management by creditor banks
Obligations by the firm in financial difficulty
Termination of workouts
• Developing Turnaround Fund by Joint-venturing with
Executive Yuan Development Fund ( the Fund)
• Broadening the investment scope of the Fund to venture capital firms which
focus on turning around companies
• Raising the ceiling of investment of the Fund
Current Judicial Reform on Bankruptcy
• Draft Amendments to the Bankruptcy Law
– Connection of liquidation and bankruptcy
– The procedures for liquidation of government-owned
corporations
– The recognition of bankruptcy judgments declared in foreign
courts
• MOF Suggestions on the Draft
– Balancing the rights between creditors and debtors
– Avoid appointing the debtor’s management as receivers or
conservators
– Bankruptcy cases assigned to specific divisions or judges
Summary
• Improving asset quality continuously in order to
restore financial intermediary function
• Guiding debt-rescheduling to real restructuring in
order to maximize NPL value
• Supporting turnaround fund in order to develop
corporate restructuring expertise