UPDATE 1-Taiwan Nat'l Development Fund to get $3.1 bln loan

By Faith Hung

(Adds quotes, details)

TAIPEI, Dec 22 (Reuters) - Taiwan's National Development Fund
will get a T$100 billion ($3.1 billion) loan by year-end, its
first-ever external borrowing, to aid manufacturers hit by the
global economic slowdown, an official said on Monday.

The financing, the fund's first bank loan in its 35-year
history, would come from the government-owned Bank of Taiwan,
said James Ho, deputy executive secretary of the fund.

"Every country in the world is taking similar action to aid
distressed industries, all of which are pretty much running short
of cash," Ho told Reuters by phone.

"The timing is actually quite good for us. Once the economy
recovers, the returns from our investments would be handsome," he
said.

"Key, strategic manufacturing industries" would receive aid,
said the deputy executive secretary, declining to provide
specific details.

The fund is still waiting for the government to finalise
details of further fund-raising next year, Ho said.

He denied a local newspaper report that the fund would borrow
T$240 billion from the Taiwan postal service, operator of the
island's largest financial institution with T$4.9 trillion in
deposits.

DRAM DISTRESS

The T$100 billion loan is part of the Taiwan Cabinet's
broader effort to rescue the island's struggling companies and
sagging economy hurt by the global financial crisis.

The cabinet recently approved a plan to raise the fund's size
five-fold to T$1 trillion, borrowing some of the new funds from
the postal service. [ID:nTP369496].

Taiwan's DRAM makers, which compete with South Korean rivals
and have struggled with falling prices and a supply glut, could
be on the top of the list for assistance.

The island's economics ministry said last week it would
support the industry by helping it develop more local technology
and providing aid to local players posting major losses during
the sector's worst downturn. [ID:nTP199281]

The fund would use its current holdings in shares of Taiwan
Semiconductor Manufacturing (2330.TW) (TSM.N), Mega Financial
(2886.TW) and other Taiwan stocks as collateral for the loan, Ho
said.

Some DRAM makers bucked the broader market's 3.4
percent slide, with ProMOS (5387.TWO) shooting up 5.8 percent and
Nanya Technology (2408.TW) ending unchanged. But top player
Powerchip (5346.TWO) went limit-down.

($1=T$32.6)
(Reporting by Faith Hung; Editing by Jonathan Hopfner)