The central bank yesterday said interest rates charged by four local brokerages on margin loans remained too high, as compared to the central bank’s recent substantial reduction in its benchmark discount rate in four months.
This was the second warning from the central bank in two weeks about the relatively high interest rates the four local brokerages offer customers to buy shares.
On Jan. 9, the central bank urged Yuanta Securities Finance (元大證金), Fubon Securities Finance Co (富邦證金), EnTie Securities Finance Co (安泰證金) and Global Securities Finance Corp (環華證金) to cut their interest rates, after the bank cut its discount rate to 1.5 percent on Jan. 7 and have lowered the rate by a total of 212.5 basis points since September.
With the central bank’s persuasion, the four brokerages lowered their margin loan rates last time by a range of between 0.125 percentage points and 0.25 percentage points, which the central bank believed was too small, a central bank statement showed yesterday.
In comparison, five government-owned or controlled banks including Bank of Taiwan (台灣銀行), the Land Bank of Taiwan (土地銀行) and Taiwan Cooperative Bank (合作金庫銀行) — which also run brokerage business — have cut their rates by a range of between 1-percentage point and 1.5 percentage points, the central bank’s statement said.
The four brokerages have their margin loan interest rates as high as 6.5 percent to 6.525 percent, compared to rates of around 4.25 percent to 5.25 percent charged by banks that double as brokerages, the statement said