Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-performing/Non-accrual Loans Article 5

A bank shall evaluate credit assets on and off balance sheet in accordance with Articles 3 and 4, and shall allocate sufficient loan loss provision as well as reserves against liability on guarantees. The minimum loan loss provision and guarantee reserve shall be the sum of 1% of the outstanding balance of Category One credit asset's claim (excluding assets that represent claims against the central and local government in Taiwan), 2% of the balance of Category Two credit assets, 10% of the balance of Category Three credit assets, 50% of the balance of Category Four credit assets, and the full balance of Category Five credit assets.To strengthen the ability of banks to bear the loss of specific credit assets, the Competent Authority may, if necessary, require banks to raise loan loss provision and guarantee reserve of specific credit assets.