The Japanese government's handling of the financial troubles of Resona Group is unlikely to fully resolve the lender's fundamental problems, Standard and Poor's Ratings Services said yesterday.
"A key concern for Standard and Poor's is whether the government's handling of the Resona case will merely be a repeat of the bank bailout in 1999," S&P director Takamasa Yamaoka said in a report.
"The [cash] infusion into Japan's major banks in 1999 was ultimately only a temporary solution and failed to eradicate the fundamental problems that had caused the shortage," he said.
The report came after the banking group formally asked the government to bail it out to the tune of Japanese Yen 1.96 trillion (US$16.6 billion) in public funds on Friday and announced a restructuring program, including the forced resignation of executives.
"The forced resignations should put pressure on managers at both Resona and other banks, which may accelerate a change in credit practices at Japanese banks," Yamaoka said. "However, real change in management's practices will hinge largely on the motives of all the participants."
Some politicians are likely to expect Resona Bank to keep playing a public role as a provider of financial support to the stagnant economy in the Kansai region in western Japan, he said.
This role may put a heavy drag on Resona's efforts to improve its profitability, he said.
Meanwhile, S&P said Tokyo's move to bail out the bank had no direct impact on its sovereign ratings on Japan. S&P said it regarded the non-performing loan problems as a contingent liability of the government and incorporated it as a rating factor.
GROWING CONCERN: Some senior Trump administration officials opposed the UAE expansion over fears that another TSMC project could jeopardize its US investment Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is evaluating building an advanced production facility in the United Arab Emirates (UAE) and has discussed the possibility with officials in US President Donald Trump’s administration, people familiar with the matter said, in a potentially major bet on the Middle East that would only come to fruition with Washington’s approval. The company has had multiple meetings in the past few months with US Special Envoy to the Middle East Steve Witkoff and officials from MGX, an influential investment vehicle overseen by the UAE president’s brother, the people said. The conversations are a continuation of talks that
Alchip Technologies Ltd (世芯), an application-specific integrated circuit (ASIC) designer specializing in artificial-intelligence (AI) chips, yesterday said that small-volume production of 3-nanometer (nm) chips for a key customer is on track to start by the end of this year, dismissing speculation about delays in producing advanced chips. As Alchip is transitioning from 7-nanometer and 5-nanometer process technology to 3 nanometers, investors and shareholders have been closely monitoring whether the company is navigating through such transition smoothly. “We are proceeding well in [building] this generation [of chips]. It appears to me that no revision will be required. We have achieved success in designing
UNCERTAINTY: Investors remain worried that trade negotiations with Washington could go poorly, given Trump’s inconsistency on tariffs in his second term, experts said The consumer confidence index this month fell for a ninth consecutive month to its lowest level in 13 months, as global trade uncertainties and tariff risks cloud Taiwan’s economic outlook, a survey released yesterday by National Central University found. The biggest decline came from the timing for stock investments, which plunged 11.82 points to 26.82, underscoring bleak investor confidence, it said. “Although the TAIEX reclaimed the 21,000-point mark after the US and China agreed to bury the hatchet for 90 days, investors remain worried that the situation would turn sour later,” said Dachrahn Wu (吳大任), director of the university’s Research Center for
PROJECTION: KGI Financial said that based on its foreign exchange exposure, a NT$0.1 increase in the New Taiwan dollar would negatively impact it by about NT$1.7 billion KGI Financial Holding Co (凱基金控) yesterday said its life insurance arm has increased hedging and adopted other moves to curb the impact of the local currency’s appreciation on its profitability. “It is difficult to accurately depict the hedging costs, which might vary from 7 percent to 40 percent in a single day,” KGI Life Insurance Co (凱基人壽) told an investors’ conference in Taipei. KGI Life, which underpinned 66 percent of the group’s total net income last year, has elevated hedging to 55 to 60 percent, while using a basket of currencies to manage currency volatility, the insurer said. As different