TheCDIChandled the resolutionof failed financial institutions throughconservatorshipmeasuresalong
withgeneral assumptionor P&A transactions as follows:
I.
47Community Financial Institutions
A total of 36 community financial institutions, including credit departments of farmers’ and
fishermen’s associations and credit cooperatives, with negative adjusted net worthbasedon the
assessment reports on the financial examination conducted at the end July 2001, were selected
for the first round of resolution. Ten banks, after being inquired of their intention, agreed to
assume these problem institutions and complete the legal assignment procedure in September
of the same year. Moreover, in 2002, seven credit departments of farmers’ associations and one
credit cooperativealso facedoperational difficulties.BetweenJulyandAugust that year, the legal
assignment procedures for these institutions were completed through general assumption and
opencompetitive tender bids.
Of the 44 community financial institutions mentioned, 36 were credit departments of farmers’
and fishermen’s associations. The resolution resulted in transferring to other banks the credit
departments of the respective farmers’ and fishermen’s associations, while allowing the other
departments of the farmers’ and fishermen’s associations (such as the supply andmarketing
departments,promotion subsections, andassociation services subsections) to remain soas tonot
affect thepromotionof agricultureand fisherypolicy.
The
Agricultural Finance Act
enacted on January 30, 2004, stipulates that, when a credit
department of the farmers' and fishermen's associations has negative net worth, the Financial
Restructuring Fund will make up the gap for the credit department during its existence. After
that, the central competent authority for farmers' and fishermen's associations (the Council of
Agriculture) may order such credit departments to be acquiredby other farmers' or fishermen's
associations. In the acquisition process, the Council of Agriculture assigned the Bureau of
Agricultural Finance (BOAF) to invite related units to form a task force for the assumption of
functions and powers and dispatch acting directors and supervisors to assume the functions
and powers, and suspendmeetings of the associationmembers. The CDICwas the task force
member in charge of appointing an accounting firm for asset and liability assessment. The
Financial Restructuring Fund also authorized the CDIC to jointly arrange price negotiations
with the acquiring farmers' associations. The resolutions of two credit departments of farmers'
associations were jointly handled betweenMarch 2005 andMarch 2007. When the Financial
Restructuring Fund period ended, the funds for meeting capital shortfalls at the credit
departments of farmers' and fishermen's associations had been retained during the Financial
RestructuringFundperiodandwereearmarked for useby theBOAF.
46
Central Deposit Insurance Corporation 30Years inRetrospect
