The Financial Supervisory Commission (FSC) yesterday said it would consider easing regulations on life insurers’ real-estate investments to allow them to cut rents for tenants affected by the COVID-19 pandemic.
The commission might lower the minimum rate of return on insurers’ real-estate investments, which stands at 2.095 percent, FSC Chairman Wellington Koo (顧立雄) told a meeting of the legislature’s Finance Committee.
Koo’s comment came after the Life Insurance Association suggested the FSC trim the minimum rate of return so insurers could cut rents to help affected tenants, such as restaurants, hotels, travel agencies and department stores.
While the association suggested a cut of 50 basis points, Koo did not reveal how much the reduction would be, only saying that the commission would make the decision within two weeks.
The commission would also conduct inspections to see if life insurers did lower rents for their tenants, Koo said.
The minimum rate of return on insurers’ real-estate investments was set in a bid to ensure that insurers have enough liquidity to pay out compensation, he added.
Domestic real-estate investments help insurance companies maintain their cash flow with stable income from rent and ease the pressure from potential losses from foreign-exchange transactions, the commission said.
Leading landlords Cathay Life Insurance Co (國泰人壽), Shin Kong Life Insurance Co (新光人壽), Fubon Life Insurance Co (富邦人壽) and Nan Shan Life Insurance Co’s (南山人壽) reported rental incomes of NT$7.95 billion (US$262.3 million), NT$3.15 billion, NT$3.04 billion and NT$2.91 billion respectively for the first three quarters of last year, data from the companies showed.
Addressing the issue of mortgage rates, Koo said the government had asked state-run banks to lower interest rates on loans of less than NT$10 million by 50 basis points to ease debtors’ burden.
The commission has also requested that all banks lower their mortgage rates by at least 25 basis points, after the central bank cut its benchmark rate by the same ratio last week, he said.
However, privately run banks are not likely to follow suit, as they have said it would not be fair to reduce the interest rate for all debtors, but they would consider trimming rates for those affected by the pandemic, he said.
As the Central Epidemic Command Center has suggested people avoid indoor gatherings of more than 100 people, Koo said the commission would encourage listed firms to hold outdoor meetings and use electronic voting to reduce the number of attendees at shareholders’ meetings.
Last year, 23 listed companies saw more than 100 people attend their shareholders’ meetings, the commission said.
Separately, the central bank yesterday said it has slashed the interest it pays financial institutions on reserves that originate from passbook and time deposits to reflect market interest rates.
The central bank is to pay an interest rate of 0.068 percent on reserves from passbook deposits and 0.560 percent on reserves from time deposits, effective today, it said in a statement.
The new rates represent reductions of 0.078 percentage points and 0.260 percentage points for their passport and time deposits respectively.
Interest is paid to financial institutions’ B accounts, which constitute 55 percent of their reserves, while the central bank does not pay interest on A accounts, which make up the remainder.
Additional reporting by staff writer
SIZE MATTERS: Medium-sized hotels that do not have the support of parent groups are more vulnerable and are forced to take action, a REPro Knight Frank researcher said About 50 hotels across Taiwan are seeking to exit the market as they succumb to the bleak business outlook amid international travel restrictions imposed to combat the COVID-19 pandemic. Yomi Hotel (優美飯店) on Minsheng E Road, Sec 1, in Taipei is seeking to transfer ownership with an asking price of NT$950 million (US$32.15 million) and a pledge for a lease contract that guarantees a 3 percent return. The budget hotel, with room rates that start from NT$1,400 per night, maintains normal operations, but has been struggling since March, when the government placed restrictions on inbound and outbound travel. Occupancy rates for hotels in
With the US dollar expected to weaken in the next 12 months due to near-zero interest rates, investors should consider purchasing US corporate bonds, Standard Chartered Bank Taiwan Ltd (渣打台灣銀行) said on Thursday. The bank said that the US Federal Reserve since last month has been buying bonds issued by US companies to curb default rates. The US dollar is forecast to be weaker against the pound, the euro and the yen, as well as the Canadian dollar, the Swedish krona and the Swiss franc, as the greenback lacks high investment returns after the Fed in March slashed the benchmark interest rate
A Bollywood actor’s face tattooed on his arm, Sandeep Bacche’s devotion shocks few in India where stars enjoy semi-divine status, but even there the hallowed silver screen might be losing its shine to streaming services and pandemic fears. “Whenever things get better and theaters begin operations, I will watch three movies a day for sure just as a way to celebrate,” said the Mumbai rickshaw driver, who is recovering from the virus himself. However, others might not join the party. With cinemas shut for months due to a COVID-19 lockdown, and little prospect they will reopen soon, frustrated Bollywood producers have turned to
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, is to issue NT$13.9 billion (US$469.5 million) in unsecured bonds to help fund its plan to expand production capacity, it said on Friday. In a Taiwan Stock Exchange filing, TSMC said the bonds would comprise three tranches: NT$5.7 billion payable over five years, NT$6.3 billion over seven years and NT$1.9 billion over 10 years. The interest rates would be 0.58 percent on the five-year bonds, 0.65 percent on the seven-year ones and 0.67 percent on the 10-year tranche, TSMC said. Capital Securities Corp (群益金鼎證券) is to serve as the main underwriter in