DRAM, TFT-LCD Firms in Taiwan Near Limits on Syndicated Loans

Taipei, Nov. 19, 2009 (CENS)--The banks in Taiwan have financed virtually the maximum allowed to DRAM (dynamic random access memory) and TFT-LCD (thin film transistor-liquid crystal display) firms, which is expected to also impact syndicated lending to relevant industries.

Although Taiwan's syndicated-loan market simmers, domestic banks are keeping an eye on DRAM and TFT-LCD firms' amortization capacities.

An industry insider noted AU Optronics Corp. and Chi Mei Optoelectronics Corp. have almost borrowed almost all the syndicated loans allowed for the domestic TFT-LCD industry by acquiring NT$70 billion (about US$2.16 billion) in loans combined in the first half of this year.

The global meltdown has forced domestic banks to limit financing to a single firm and its affiliates to minimize operating risks.

For instance, the Bank of Taiwan limits outstanding loans to a single industry to 10% to 20% of its net worth and up to NT$230 billion (US$7.09 billion).

Hua Nan Bank sets maximums in financing to various industries: at NT$83.7 billion (US$2.58 billion) for the electronics and components sector, NT$136.9 billion (US$4.22 billion) for the construction and real-estate sector, and NT$79.8 billion (US$2.46 billion) for the transport vehicles and parts sector.

A bank executive noted, despite increased demand for business loans, domestic banks will not ease maximums on financing for the global recovery is still uncertain.