The Financial Supervisory Commission (FSC) yesterday dealt a fifth round of punitive measures against banks that have broken customer verification rules relating to derivative sales such as yuan-linked target redemption forwards (TRF).
Among the 14 banks that received a citation, three were fined NT$2 million (US$66,408) while another three were fined NT$4 million, bringing the total amount of fines to more than NT$100 million since the beginning of the TRF crisis that left investors with massive losses.
The fines are likely to be the last as the TRF contracts are expiring and banks have stopped selling the risky derivative instrument.
The infractions were discovered during a probe conducted late last year, Banking Bureau Deputy Director-General Lu Hui-jung (呂蕙容) told a news conference in Taipei.
A number of banks had failed to verify the validity of information submitted by their customers, such as board of directors’ meeting minutes and financial reports, Lu said, adding that some of the documents were provided by banks to facilitate derivative sales.
In addition, banks had been lax in setting up offshore banking unit accounts for their clients, she said.
“The banks in question have neglected the required ‘know your customer’ checks, and the procedure has degraded into a set of routines that superficially meet compliance rules,” she said.
However, Lu was unable to provide details on how the methods used by the commission’s Financial Examination Bureau to determine wrongdoing related to document submissions by affected bank customers.
She said that while some of the affected customers had given their consent for banks to lend their aid in drafting the document on their behalf, banks had been overzealous in providing services to gain larger derivative sales.
Still, these customers have since entered arbitration and mediation with third-party organizations to resolve disputes about TRF losses, Lu said.
“The commission’s penalties would not affect the neutrality of third-party mediators,” Lu said.
The Financial Ombudsman Institution last week said that it has taken on 110 cases regarding derivative disputes, of which 62 have been completed and 48 are ongoing.
In related news, aggregate bank earnings in the first four months of this year fell 8.2 percent annually to NT$103.88 billion, due to a high basis set last year, commission data showed.
POOR INTERNAL CONTROLS: Insurance Bureau Director-General Shih Chiung-hwa said the company is expected to get back on track while its chairman is suspended The Financial Supervisory Commission (FSC) yesterday fined Shin Kong Life Insurance Co (新光人壽) NT$27.6 million (US$939,415) for a reckless investment that endangered its solvency, and suspended its chairman Eugene Wu (吳東進) for poor supervision. The penalty is the second-highest in a single case after Nan Shan Life Insurance Co (南山人壽) was fined NT$30 million in September last year and its chairman Du Ying-tzyong (杜英宗) suspended for two years, the commission said. In three rounds of special and regular examinations conducted since last year, the commission found that Shin Kong Life had given too much power to an asset and liability management committee
HEAVY INVESTMENT: Moody’s affirmed the firm’s ‘Aa3’ rating with a ‘stable’ outlook due to its leading position in the industry and ability to match customer requirements Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) revenue this year is expected to increase about 21 percent to NT$1.29 trillion (US$44.01 billion) from NT$1.07 trillion last year, driven by strong demand for advanced 5-nanometer and 7-nanometer chips mainly used in smartphones and high-performance computing devices, a Moody’s Investors Service report on Wednesday said. TSMC’s rate of revenue growth next year is to increase to 7.5 percent, the ratings agency said. The company, which supplies 5-nanometer chips for Apple Inc’s new iPad series, has introduced the advanced chips ahead of its competitors and gained a significant share of the market for the foundry industry’s
Sony Corp has cut its estimated Play Station 5 (PS5) production for this fiscal year by 4 million units, down to about 11 million, following production issues with its custom-designed system-on-chip (SOC) for the new console, people familiar with the matter said. The Tokyo-based electronics giant in July boosted orders with suppliers in anticipation of heightened demand for gaming in the holiday season and beyond, as people spend more time at home due to the COVID-19 pandemic. However, the company has come up against manufacturing issues, such as production yields as low as 50 percent for its SOC, which have cut into
O2O BICYCLE SHOW: The Taiwan Bicycle Show next year is to be online to offline, with forums, audio-visual conferences and livestreaming of the offline events Local bicycle makers expect demand to continue outpacing supply due to orders triggered by the COVID-19 pandemic, with some companies seeing orders back up through next year. “Next year is all full in terms of orders. Our lead time on components is one year,” Giant Manufacturing Co Ltd (巨大機械) chairwoman Bonnie Tu (杜綉珍) told a news conference in Taipei organized by the Taiwan External Trade Development Council (TAITRA) to announce next year’s Taipei Cycle Show. The pandemic has reduced bicycle supplies and increased demand around the world, Robert Wu (吳盈進), chairman of KMC (Kuei Meng) International Inc (桂盟國際), one of the world’s