Taiwanese banks have full collateral for the multimillion-dollar syndicated loan to an affiliate of Chinese solar energy conglomerate Hanergy Holding Group Ltd (漢能控股), which saw the shares of one of its subsidiaries tumble on Hong Kong’s main bourse last week, Financial Supervisory Commission (FSC) Chairman William Tseng (曾銘宗) said yesterday.
Hanergy Thin Film Power Group Ltd (漢能薄膜發電集團) shares tumbled nearly 50 percent on Wednesday last week, erasing more than NT$570 billion (US$18.65 billion) from its market capitalization.
That sparked concern over seven Taiwanese creditors’ syndicated loan to Hanergy Capital Ltd (漢能資本), another affiliate of Hanergy Holding.
In December last year, Hanergy Capital signed a contract for an US$82 million syndicated loan led by Taiwan’s Bank SinoPac (永豐銀行). Ten other banks, including six from Taiwan, participated in the loan. It was the first time lenders from both sides of the Taiwan Strait collaborated on a syndicated loan.
Tseng said that it is inappropriate to call the syndicated loan “a time bomb,” as Hanergy Capital has offered letters of credit from China’s Bank of Communications Co (交通銀行) and the Export-Import Bank of China (中國進出口銀行) guaranteeing up to US$79.54 million of the loan.
Moreover, Hanergy Thin is not facing any financial or operating problems, and the main concern stems from its drastic stock price decline, he said.
Tseng said the commission has asked Taiwanese banks to raise provisioning for their China exposure to 1.5 percent of their total Chinese loans by the end of this year, with the commission set to launch a more complete financial examination of their exposure to monitor the situation.
The commission conducted a stress test on domestic lenders’ exposure to China late last year, with the results showing that the local banking sector could withstand the pressure given a risk-based capital of above 8 percent, the minimum required by the government.
Tseng added that the controversy over the Taipei Dome (台北大巨蛋) project has made local banks and insurers more cautious about participating in syndicated loans for build-operate-transfer (BOT) projects.
State-run Mega International Commercial Bank (兆豐銀行) heads the NT$15.4 billion syndicated loan for the Taipei Dome, with superficies rights to the project.
That means if the Dome is not completed, government-owned banks participating in the loan will not be able to get a penny back.
In related news, Tseng said the timing of the US Federal Reserve’s policy rate hike remains a major uncertainty that would continue to affect the TAIEX’s trading momentum.
As of Thursday last week, portfolio investments by foreign investors stood at a net US$204.6 billion, marking a new record high, Tseng said, adding that the funds would flow into the local stock market “sooner or later.”
‘BIG LOSS’: This year might see the last generation of Huawei’s Kirin chips, as their production would stop next month because they are made using US technology Chinese tech giant Huawei Technologies Co (華為) is running out of processor chips to make smartphones due to US sanctions and would be forced to stop production of its own most advanced chips, a company executive has said, in a sign of growing damage to Huawei’s business from US pressure. Huawei, one of the biggest producers of smartphones and network equipment, is at the center of US-Chinese tension over technology and security. Washington last year cut off Huawei’s access to US components and technology, and those penalties were tightened in May, when the White House barred vendors worldwide from using US
’WHITE BOX’: The open platform would give local firms access to Cisco’s cloud-based mobile network to develop 5G telecom equipment and tap into the global market The Ministry of Economic Affairs (MOEA) yesterday introduced a new 5G “open lab” in collaboration with US-based information technology and networking giant Cisco Systems Inc to address the rapidly growing “white box” 5G networking equipment market. The open lab will be a platform where Taiwanese manufacturers can access Cisco’s cloud-based mobile network to develop their own 5G telecom equipment, such as small-cell base stations, network switches, modems and Internet of things (IoT) devices, a ministry statement said. The open platform would allow Taiwanese manufacturers to tap into the lucrative 5G telecom equipment market, which was previously monopolized by Nokia Oyj, Ericsson AB
CORPORATE SCANDAL: Cathay Life has invested NT$13.3 billion in Bank Mayapada since 2015, but the latest loss of NT$8.8 billion has completely written off its investment Cathay Life Insurance Co (國泰人壽) yesterday said it would recognize an investment loss of NT$8.8 billion (US$298.1 million) in Indonesia’s Bank Mayapada Internasional Tbk PT due to concerns about the lender’s operations amid a corporate scandal. The company said it would revise its earnings result for June, from a net profit of NT$6.52 billion to a net loss of NT$520 million, its first monthly loss over the past 17 months. After booking an investment loss of NT$5.2 billion in Bank Mayapada earlier this year, Cathay Life has so far recognized total investment losses of NT$14 billion in the lender, executive vice president
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reported that revenue last month expanded 25 percent annually, but fell 12.8 percent month-on-month to NT$105.96 billion (US$3.59 billion). In the first seven months of this year, the chipmaker’s revenue surged 33.6 percent to NT$727.26 billion, compared with NT$544.46 billion a year earlier. TSMC has said it aims to grow its revenue by more than 20 percent this year. The company has since May 15 stopped taking new orders from Huawei Technologies Co (華為), its second-biggest customer after Apple Inc, due to the US’ restrictions on exports containing US technologies. TSMC has no plans to