Mega Financial Holding Co (
"The worst-case scenario for us is that we may write off a loss of around 3 percent to 5 percent of our NT$5 billion CDO [collateralized debt obligation] holdings," company spokesman Simon Dzeng (曾垂紀) said.
Mega Financial's total investment in securities linked to subprime home loans in the US is NT$150 million, Dzeng said.
The executive said there was no reason to believe that Mega Financial would have to write off the whole CDO portfolio.
Dzeng was responding to a Commercial Times report which said the company could face such a loss from its subprime mortgage exposure, accounting for 28.5 percent of its estimated net profit this year.
Growing problems in the US home lending market have led to a credit crunch globally, with several top financial institutions, including US investment house Bear Stearns, having to take substantial losses on their exposure.
Many banks and mortgage providers lent money to people with weak credit histories at the height of the US housing boom in 2005 and last year, but as interest rates have risen, a large number of those loans have gone bad.
Concern is growing that the true extent of the problem could be much worse as the mortgages were repackaged into other securities, usually CDOs, which were in turn sold to banks and investors, mostly institutions.
Meanwhile, Taiwan Ratings Corp (中華信評), a local arm of Standard & Poor's Ratings Services, said yesterday that that its ratings on three life insurers remained intact.
Ratings on Taiwan Life Insurance Co (台壽保), Cathay Life Insurance Co (國泰人壽), and Shin Kong Life Insurance Co (新光人壽) were not immediately affected by the insurers' disclosure of their exposure to US subprime mortgage-related instruments, Taiwan Ratings said in a release yesterday.
The ratings agency said it did not expect potential credit losses to materially erode the companies' capital bases, given their adequate profitability and capitalization.
Last week, Taiwan Life Insurance said it booked a US$13 million loss in the first half from writing off investments in the failed Bear Stearns High Grade Credit Strategies fund.
Media reports also said that besides Mega Financial, six other companies faced similar problems, including Shin Kong Financial Holding Co (
A Shin Kong official said that any resulting loss from its exposure would be limited as it would be "insignificant against our annual income of more than NT$50 billion from fixed-income investments and capital gains."
Three experts in the high technology industry have said that US President Donald Trump’s pledge to impose higher tariffs on Taiwanese semiconductors is part of an effort to force Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to the negotiating table. In a speech to Republicans on Jan. 27, Trump said he intends to impose tariffs on Taiwan to bring chip production to the US. “The incentive is going to be they’re not going to want to pay a 25, 50 or even a 100 percent tax,” he said. Darson Chiu (邱達生), an economics professor at Taichung-based Tunghai University and director-general of
‘LEGACY CHIPS’: Chinese companies have dramatically increased mature chip production capacity, but the West’s drive for secure supply chains offers a lifeline for Taiwan When Powerchip Technology Corp (力晶科技) entered a deal with the eastern Chinese city of Hefei in 2015 to set up a new chip foundry, it hoped the move would help provide better access to the promising Chinese market. However, nine years later, that Chinese foundry, Nexchip Semiconductor Corp (合晶集成), has become one of its biggest rivals in the legacy chip space, leveraging steep discounts after Beijing’s localization call forced Powerchip to give up the once-lucrative business making integrated circuits for Chinese flat panels. Nexchip is among Chinese foundries quickly winning market share in the crucial US$56.3 billion industry of so-called legacy
Hon Hai Precision Industry Co (鴻海精密) is reportedly making another pass at Nissan Motor Co, as the Japanese automaker's tie-up with Honda Motor Co falls apart. Nissan shares rose as much as 6 percent after Taiwan’s Central News Agency reported that Hon Hai chairman Young Liu (劉揚偉) instructed former Nissan executive Jun Seki to connect with French carmaker Renault SA, which holds about 36 percent of Nissan’s stock. Hon Hai, the Taiwanese iPhone-maker also known as Foxconn Technology Group (富士康科技集團), was exploring an investment or buyout of Nissan last year, but backed off in December after the Japanese carmaker penned a deal
WASHINGTON POLICY: Tariffs of 10 percent or more and other new costs are tipped to hit shipments of small parcels, cutting export growth by 1.3 percentage points The decision by US President Donald Trump to ban Chinese companies from using a US tariff loophole would hit tens of billions of dollars of trade and reduce China’s economic growth this year, according to new estimates by economists at Nomura Holdings Inc. According to Nomura’s estimates, last year companies such as Shein (希音) and PDD Holdings Inc’s (拼多多控股) Temu shipped US$46 billion of small parcels to the US to take advantage of the rule that allows items with a declared value under US$800 to enter the US tariff-free. Tariffs of 10 percent or more and other new costs would slash such