A planned cap on lending rates for credit-payment tools is unpopular among foreign investors and academics, who took the possible regulatory tightening measure as a regressive move that would adversely affect Taiwan's banking sector and free-market economy.
Lawmakers decided on Tuesday night to push forward a proposed amendment to the Banking Law (
Borrowers, meanwhile, would be required to repay a minimum of 20 percent of monthly payables, up from the current 2 percent to 5 percent, according to the motion.
PHOTO: KAO CHAO-FEN, TAIPEI TIMES
The proposed amendment is likely to pass the third reading in the legislature tomorrow.
"Taiwan's politicians will only increase downside investment risk if they cap the card-lending spread at 10 percent, to ease the burden of deeply indebted borrowers," Jesse Wang (
Likening the initiative to fighting fire with gasoline, Wang predicted that the possible regulatory restriction could suddenly turn all local credit and cash-advance card operations into money-losing businesses, and lead financial stocks to drop at least 10 percent.
Taiwanese retail investors would therefore suffer a loss of net worth, while consumer defaults could rise sharply as borrowers find it difficult to obtain re-financing liquidity, he said.
The nation's financial stocks slid 1.2 percent on the Taiwan Stock Exchange yesterday in the wake of lawmakers' decision.
Shares of Chinatrust Financial Holding Co (中信金控) and Taishin Financial Holding Co (台新金控), parent companies of the nation's two biggest credit-card issuers, plummeted by 5.11 percent and 5.73 percent to NT$26.95 and NT$18.10, respectively.
"This is an intervention in the pricing of the free market mechanism," said Shen Chung-hua (
The restriction would cause lenders to tighten their lending policies, which could be helpful for youngsters who borrow to shop, but would have a greater impact on adults who are in real need of funding, Shen said.
Both Shen and Wang said the biggest beneficiaries could be underground lenders -- loan sharks -- as they are not restricted by the law.
Financial regulators do not seem supportive of the proposed cap either. Financial Supervisory Commission spokesman Lin Chung-cheng (林忠正) told the USTV cable station yesterday that the credit- and cash-card business may shrink by 30 percent to 40 percent, or NT$300 billion, if the restriction takes effect.
Taiwan's lending rates are not especially high, compared with Singapore's 24 percent, Hong Kong's 26 percent, South Korea's 19 percent to 24.9 percent and Japan's 29.2 percent, the commission said last month.
To control potentially increasing costs, consumers may have to start paying annual fees or increased surcharges, and could face shrinking preferential services in the future, said one of the nation's top credit-card lenders, who asked to remain anonymous.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) last week recorded an increase in the number of shareholders to the highest in almost eight months, despite its share price falling 3.38 percent from the previous week, Taiwan Stock Exchange data released on Saturday showed. As of Friday, TSMC had 1.88 million shareholders, the most since the week of April 25 and an increase of 31,870 from the previous week, the data showed. The number of shareholders jumped despite a drop of NT$50 (US$1.59), or 3.38 percent, in TSMC’s share price from a week earlier to NT$1,430, as investors took profits from their earlier gains
In a high-security Shenzhen laboratory, Chinese scientists have built what Washington has spent years trying to prevent: a prototype of a machine capable of producing the cutting-edge semiconductor chips that power artificial intelligence (AI), smartphones and weapons central to Western military dominance, Reuters has learned. Completed early this year and undergoing testing, the prototype fills nearly an entire factory floor. It was built by a team of former engineers from Dutch semiconductor giant ASML who reverse-engineered the company’s extreme ultraviolet lithography (EUV) machines, according to two people with knowledge of the project. EUV machines sit at the heart of a technological Cold
TAIWAN VALUE CHAIN: Foxtron is to fully own Luxgen following the transaction and it plans to launch a new electric model, the Foxtron Bria, in Taiwan next year Yulon Motor Co (裕隆汽車) yesterday said that its board of directors approved the disposal of its electric vehicle (EV) unit, Luxgen Motor Co (納智捷汽車), to Foxtron Vehicle Technologies Co (鴻華先進) for NT$787.6 million (US$24.98 million). Foxtron, a half-half joint venture between Yulon affiliate Hua-Chuang Automobile Information Technical Center Co (華創車電) and Hon Hai Precision Industry Co (鴻海精密), expects to wrap up the deal in the first quarter of next year. Foxtron would fully own Luxgen following the transaction, including five car distributing companies, outlets and all employees. The deal is subject to the approval of the Fair Trade Commission, Foxtron said. “Foxtron will be
INFLATION CONSIDERATION: The BOJ governor said that it would ‘keep making appropriate decisions’ and would adjust depending on the economy and prices The Bank of Japan (BOJ) yesterday raised its benchmark interest rate to the highest in 30 years and said more increases are in the pipeline if conditions allow, in a sign of growing conviction that it can attain the stable inflation target it has pursued for more than a decade. Bank of Japan Governor Kazuo Ueda’s policy board increased the rate by 0.2 percentage points to 0.75 percent, in a unanimous decision, the bank said in a statement. The central bank cited the rising likelihood of its economic outlook being realized. The rate change was expected by all 50 economists surveyed by Bloomberg. The
RSS