Lenders have emerged from a third-quarter stress test unscathed, despite escalating volatility in foreign-exchange and equity markets, Financial Supervisory Commission Chairman Wellington Koo (顧立雄) said yesterday.
The financial regulator conducted a stress test of banking institutions to see how they would fare amid modest and extreme fluctuations in the equity, foreign-exchange and housing markets, as well as interest rate and GDP changes.
“They seem to be fine under either scenario,” Koo told reporters on the sidelines of a speech on corporate governance to a group of business leaders.
The test came as global funds flee emerging markets amid US-China trade tensions and the US Federal Reserves’ interest rate hikes, creating heavy selling pressure on their bourses and currencies.
The commission tested a two-year time span, as opposed to one year in previous tests, on concern that the trade conflicts might persist.
The test aims to identify local banks with above-par bad loans, and whether any of them are concentrating credit in a few sectors, Koo said.
“All passed the test and there is no need for corrective measures,” Koo said, adding that the commission would release a formal report soon.
Taiwan has a stable financial system with the world’s lowest non-performing loans and the highest insurance premiums against GDP share, Koo said, citing a World Economic Forum report published yesterday.
The commission is to enhance corporate governance by requiring all listed companies to install independent directors and allowing them to form audit committees from 2020 to 2022, Koo said.
It is also to push institutional stakeholders, particularly from banks and insurance companies, to join shareholders’ meetings with a view to raising attendance to half next year and 70 percent in 2020, from the current 30 percent and 40 percent respectively.
In addition, the commission by next year plans to make listed firms issue English-language financial statements for companies with capital of NT$10 billion (US$324.15 million) and foreign investors holding 30 percent of shares, he said.
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