The nation’s biggest banks are stepping up efforts to draw deposits from individuals and companies, responding to regulator demands for them to reduce a key ratio tracking their exposure to the nation’s hot housing market.
Multiple bank employees told Bloomberg News that domestic lenders are aggressively seeking both New Taiwan dollars and foreign currencies.
Lenders are targeting institutions, including insurers and corporates, and retail investors to fulfill internal deposit targets, they said.
Photo: CNA
In August, central bank Governor Yang Chin-long (楊金龍) met officials from 34 banks to underscore concerns about the high property prices and the risks for banks.
Regulators asked for improvement plans to reduce the ratio of mortgages to deposits and debentures to well below the legal maximum of 30 percent, leaving the local banks, which have always been highly liquid, in the rare position of seeking more funds from depositors.
“The ratio at banks is likely to remain at a high level as property loans are an important income channel,” Fitch Ratings analyst Cherry Huang (黃嬿如) said.
The central bank has a “very conservative” regulatory stance, she said.
“As regulators are likely to still encourage banks to diversify loans, overseas advances may become more important for banks’ revenue,” she added.
Although it is unclear how long the phenomenon would last, the effort to curb the key ratio could slow lending and crimp profits as banks pay more for deposits.
About 15 banks had ratios above 27 percent at the end of October, with four more than 28 percent, Financial Supervisory Commission data showed.
On Friday last week, the nation’s banks took more than NT$40 billion (US$1.23 billion) of special time deposits, with one-month rates of up to 1.75 percent and three-month rates of 1.76 percent, central bank data showed.
On Monday, they took in more than NT$20 billion in special deposits. Special deposits are sometimes only available for a short period, and central bank data show many transactions of about NT$10 million, but deposits of NT$1 billion have been seen.
The central bank is scheduled to hold a board meeting tomorrow, with investors watching in case there are more real-estate-related credit curbs.
During its last meeting in September, the central bank unveiled its seventh round of credit controls to cool the property market, reducing the amount of money people can borrow for second homes. It also hiked the reserve requirement ratio by 25 basis points, acting for the second time this year to raise the amount banks must hold in reserve.
That is having some effect on transactions, with housing deals in October and last month for the six special municipalities the lowest since February, which was affected by the Lunar New Year holiday.
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