Taiwan Today

The Financial Supervisory Commission has set a target for bank loans made to small and medium-sized enterprises to rise by a net of NT$100 billion (US$3.1 billion) next year. Chang Ming-daw, director-general of the Banking Bureau under the FSC, announced the 2010 goal after meeting with presidents of local and foreign banks Dec. 30. Bank executives said an increase in loans to SMEs has been included in the Executive Yuan’s financial policies due to the key role such businesses play in Taiwan’s economy. The just-disclosed lending growth target for next year amounts to only half of the target for this year, highlighting the FSC’s cautiously optimistic outlook on the economy for the coming year. Statistics showed that banks’ total outstanding loans to SMEs as of the end of November had reached only NT$3.12 trillion, representing a decline of NT$17.3 billion from the end of 2008 and a slump of NT$51.8 billon from the end of June 2008, prior to the onset of the global recession. According to the original target set by the bureau, banks were expected to boost lending to SMEs by a net of NT$300 billion from July 2008 to December 2009, or an average of NT$200 billion per year. However, as 2009 draws to a close, it appears they will fail to achieve the NT$300 billion goal and are instead likely to post a decline of more than NT$30 billion in SME loans. With the economy currently recovering at a fairly slow pace, many large private banks—including Cathay United Bank, Taipei Fubon Commercial Bank and Chinatrust Commercial Bank—are expected to report reduced lending for 2009. Among banks that are partially owned by the government, Hua Nan Commercial Bank and Taiwan Business Bank are both expected to report lending declines exceeding NT$10 billion. Consequently, the FSC set the growth target for 2010 drastically lower than that for 2009 to prevent lenders from making loans to borrowers who run the risk of defaulting. (HML-DMS)