Fitch Ratings has upgraded its assessment of the government’s propensity to support privately owned domestic systemically important banks (D-SIB) from “A-“ to “A” in light of regulatory resolve to maintain the stability of the financial system and a focus on achieving policy goals.
The government’s support was one of two key factors underlying the assessment, and the ratings upgrade takes into consideration Taiwan’s robust and predicable likelihood of support for D-SIBs, Fitch Ratings said.
The six banks with too-big-to-fail status are CTBC Bank (中信銀行), Taipei Fubon Commercial Bank (台北富邦銀行), Cathay United Bank (國泰世華銀行), Mega International Commercial Bank (兆豐銀行), Taiwan Cooperative Bank (合庫銀行) and First Commercial Bank (第一銀行).
Bank assets in Taiwan accounted for 292 percent of GDP in late 2021, higher than the ratio at most regional peers, Fitch Ratings said.
“The sovereign’s high financial flexibility helps account for the government’s ability to offer support,” it said.
Taiwan’s banking system remains predominantly funded by stable local-currency liabilities, making government support for bank liabilities — when necessary — less onerous, it said.
Taiwan’s high sovereign financial flexibility is also underpinned by its low government debt relative to the peer group, good market access and a large stock of foreign-currency reserves, it said.
However, authorities would not have the capacity to support all banks equally during a systemic crisis, it said, adding that the government might be forced to prioritize support for state-run banks and private too-big-to-fail banks over private banks without the status.
Systemic importance constitutes a key differentiator for support level, it said.
Fitch Ratings also upgraded its assessment of support for two non-D-SIB private banks — Taishin International Bank (台新銀行) and Bank SinoPac (永豐銀行) — from “BBB-“ to “BB+” on the grounds that each holds about 3.8 percent of the sector’s total deposits, giving them moderate systemic importance in a highly fragmented banking system.
The reassessment would not affect the two banks’ credit ratings, it said.
In related developments, Fitch Ratings said that outflows continued last year for Taiwan’s money market funds.
Total assets under management fell to NT$762 billion (US$24.88 billion) in January, it said.
The outflows were driven by low yields at local money market funds, widening yield gaps compared with US-dollar assets and the depreciation of the New Taiwan dollar against the greenback, it said.
The average yield bottomed out last year following four interest rate hikes and reached 0.59 percent in January, the highest since 2015, compared with 0.17 in the same month a year earlier, it said.
When an apartment comes up for rent in Germany’s big cities, hundreds of prospective tenants often queue down the street to view it, but the acute shortage of affordable housing is getting scant attention ahead of today’s snap general election. “Housing is one of the main problems for people, but nobody talks about it, nobody takes it seriously,” said Andreas Ibel, president of Build Europe, an association representing housing developers. Migration and the sluggish economy top the list of voters’ concerns, but analysts say housing policy fails to break through as returns on investment take time to register, making the
‘SILVER LINING’: Although the news caused TSMC to fall on the local market, an analyst said that as tariffs are not set to go into effect until April, there is still time for negotiations US President Donald Trump on Tuesday said that he would likely impose tariffs on semiconductor, automobile and pharmaceutical imports of about 25 percent, with an announcement coming as soon as April 2 in a move that would represent a dramatic widening of the US leader’s trade war. “I probably will tell you that on April 2, but it’ll be in the neighborhood of 25 percent,” Trump told reporters at his Mar-a-Lago club when asked about his plan for auto tariffs. Asked about similar levies on pharmaceutical drugs and semiconductors, the president said that “it’ll be 25 percent and higher, and it’ll
NOT TO WORRY: Some people are concerned funds might continue moving out of the country, but the central bank said financial account outflows are not unusual in Taiwan Taiwan’s outbound investments hit a new high last year due to investments made by contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and other major manufacturers to boost global expansion, the central bank said on Thursday. The net increase in outbound investments last year reached a record US$21.05 billion, while the net increase in outbound investments by Taiwanese residents reached a record US$31.98 billion, central bank data showed. Chen Fei-wen (陳斐紋), deputy director of the central bank’s Department of Economic Research, said the increase was largely due to TSMC’s efforts to expand production in the US and Japan. Investments by Vanguard International
WARNING SHOT: The US president has threatened to impose 25 percent tariffs on all imported vehicles, and similar or higher duties on pharmaceuticals and semiconductors US President Donald Trump on Wednesday suggested that a trade deal with China was “possible” — a key target in the US leader’s tariffs policy. The US in 2020 had already agreed to “a great trade deal with China” and a new deal was “possible,” Trump said. Trump said he expected Chinese President Xi Jinping (習近平) to visit the US, without giving a timeline for his trip. Trump also said that he was talking to China about TikTok, as the US seeks to broker a sale of the popular app owned by Chinese firm ByteDance Ltd (字節跳動). Trump last week said that he had
RSS