The Financial Supervisory Commission said yesterday that domestic financial institutions including banks and insurers had a total exposure of NT$20.26 billion (US$620 million) in investments linked to three ailing Iceland banks — Kaupthing Bank, Glitnir Bank and Landsbanki Islands Banks — that were recently nationalized by the government.
Commission Vice Chairman Wu Tang-chieh (吳當傑) told reporters that 17 domestic banks had investments totaling NT$18 billion linked to the banks.
Waterland Financial Holding Co (國票金控) encountered the biggest losses among domestic financial institutions, Wu said, citing commission data.
Waterland Financial had already set aside NT$2.1 billion in reserve for its NT$4.6 billion investments linked to the banks.
Domestic insurance companies have also invested NT$1.9 billion in such products and set aside NT$300 million in reserves for potential losses.
Two local brokerages have another exposure of NT$360 million in such investments, he said.
“Overall, the negative impact should be limited to the local financial sector,” Wu said.
In related banking news, Shin Kong Financial Holding Co (新光金控) said last night it would sell as much as NT$8 billion in newly issued common shares and preferred shares to Dai-ichi Mutual Life Insurance Co of Japan via a private placement.
Dai-ichi Mutual will increase its shareholding in Shin Kong Financial to 14.9 percent from 5.99 percent following the deal, Shin Kong Financial said in a stock exchange filing.
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