Moody's Investors Service said in a recent report that the ratings outlook for Taiwan's banks is stable, but it cautioned that further delays in reform efforts could result in some negative pressures on bank financial strength ratings.
Although the financial system faces various challenges, res-ources remain abundant, reducing the appetite for painful structural reform, noted Patrick Winsbury, the author's report and a Moody's vice president and senior analyst.
So far, Taiwan's authorities have preferred a measured approach to financial-sector reforms, according to the report. It added that "political and social realities are preventing aggressive moves to encourage system consolidation and staff downsizing, which would address the structural issue of overbanking."
Moody's said that strong systemic support continues for Taiwan's bank deposit and debt ratings, which are consequently likely to remain "stable for some time to come."
As the manufacturing industry moves to mainland China, the banks may lose customers, while lending on the mainland brings increased risks, the report noted.
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