The government's decision on Sunday to suspend a three-tier risk-control mechanism over grassroots credit cooperatives, though raising questions about its commitment to aggressive financial reform, does not post credit-rating risks for Taiwan, a Fitch Ratings official said yesterday.
"The non-performing loan [NPL] problems in this [grassroots financial] sector are well-highlighted, but they are relatively localized and there is little contagion from the problems at the cooperatives," Paul Grela, Fitch's director of financial institutions-Asia based in Hong Kong, told the Taipei Times yesterday.
Viewing the high NPL rate as by far the largest problem facing the banking system, the government has been grappling with the cooperatives' problem for some time, although very little headway has been made, he said.
"But this has not heightened financial-system risk in our view," Grela said. "At this stage, we do not view the apparent change in the Taiwanese government's attitude to reform as detrimental to the sovereign rating or signaling a change in its determination to deal with local commercial bank's NPL problems."
While the grassroots cooperatives constitute a very small segment of the financial system in Taiwan, Roxanne Liu (
"What can [the finance ministry] do?" she asked. "Some reform proposals are there, but are top government officials really serious about that? Despite all the rhetoric to fix the local cooperatives, the available solutions are limited unless government leadership can follow through on what they promised."
Fitch will issue its official sovereign rating report at the end of this month or early next month. The agency's current outlook on Taiwan is stable and the sovereign rating stands at A+.
Grela said that if the government could not present a clear blueprint for reforming the financial sector, then Fitch would be forced to question the resolve of the government, he said.
Taiwan's average NPL ratio was at 10.17 percent as of September, according to central bank. But Fitch estimates that the figure may actually be between 12 percent and 15 percent.
Standard & Poor's maintains a negative outlook for the Taiwanese banking system, it said in a statement yesterday.
A senior official from the international rating agency declined to elaborate whether stalled grassroots financial reforms would place downward pressure on the nation's sovereign rating, but it did not appear optimistic.
"The failure to implement effective public policy [does indicate] a constraining factor in Taiwan's credit ratings," Chew Ping (周彬), S&P's associate director of Asia & Pacific Sovereign Ratings, told the Taipei Times yesterday. "The latest incident confirmed this."
S&P's currently holds an AA long-term rating on Taiwan with a negative outlook.
The Singapore-based Chew said the rating may be lowered if public finances are eroded further or if banking system risks materialize, citing the previous sovereign rating report on Taiwan it published last December.
"Conversely, Taiwan's ratings may stabilize at their current levels if policymakers overcome political stalemate, promote additional structural reforms in the banking and public sectors and improve Taiwan's revenue-generating capacity." Chew said.
While both Fitch and S&P's are doubtful that the government's determination in banking reform can be sustained without political interference, they stressed that the financial system overhaul is "crucial."
"The passage of a new financial restructuring fund bill in the legislature, for example, may not be that easy, given the current political dynamics in Taiwan," Grela said. "We would tend to view negatively any significant delay, watering down or change in government policy in this regard."
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last
US CONSCULTANT: The US Department of Commerce’s Ursula Burns is a rarely seen US government consultant to be put forward to sit on the board, nominated as an independent director Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday nominated 10 candidates for its new board of directors, including Ursula Burns from the US Department of Commerce. It is rare that TSMC has nominated a US government consultant to sit on its board. Burns was nominated as one of seven independent directors. She is vice chair of the department’s Advisory Council on Supply Chain Competitiveness. Burns is to stand for election at TSMC’s annual shareholders’ meeting on June 4 along with the rest of the candidates. TSMC chairman Mark Liu (劉德音) was not on the list after in December last