Local banks saw the credit risk of their overseas branches worsen due to the fallout of the COVID-19 pandemic after reporting US$400 million in potential loan losses as of Thursday, double that of a year earlier, Financial Supervisory Commission (FSC) data showed.
FSC rules stipulate that local banks must report possible losses of US$10 million or higher from corporate loan defaults at their overseas branches.
As the commission only received reports of a possible US$200 million in loan losses from the same period last year, banks this year seem to be encountering higher credit risks amid the COVID-19 pandemic, Banking Bureau Deputy Director-General Lin Chih-chi (林志吉) told a news conference in New Taipei City on Thursday.
Local banks’ overseas branches over the past few years have more aggressively participated in international syndicated loans, leading to a higher risk of bad loans, Lin said.
Since July, eight Taiwanese banks reported a combined loss of US$58 million from a syndicated loan to Indonesia-based PT Tiphone Mobile Indonesia Tbk, a retailer of mobile and prepaid top-up cards, Lin said, adding that the loan lacked any collateral.
In the second quarter, CTBC Bank (中國信託銀行) reported a loss of US$90 million from a syndicated loan to Singapore oil trader Hin Leong Trading Pte Ltd (興隆貿易), corporate data showed.
The FSC has begun to scrutinize banks’ loan defaults, demanding explanations of their lending strategies and risk management, FSC Chairman Huang Tien-mu (黃天牧) told reporters in Taipei yesterday.
Many firms have had financial difficulties during the pandemic, so banks are more likely to see companies with less strong performance have trouble repaying their loans, although local banks have remained overall resilient, Huang said.
The average non-performing loan (NPL) rate of banks’ overseas branches doubled from 0.23 percent as of the end of January to 0.47 percent as of the end of July, while the overall total of loan defaults by foreign branches reached NT$9.95 billion (US$337.22 million) from NT$4.6 billion six months earlier, commission data showed.
Among local banks, CTBC Bank reported the highest losses, with defaults totaling NT$3.1 billion, or 33 percent of the total, the data showed.
CTBC Bank plans to trim targeted lending for its operation in Southeast Asia, where economies have been affected by the pandemic, as well as improve risk management in the region, CTBC president James Chen (陳佳文) told reporters at an event in Taipei.
The profit from overseas branches might decline annually amid rate cuts and the pandemic, Chen added.
Alphabet Inc’s Google on Tuesday announced plans to buy a New York office building for US$2.1 billion, confirming its push into the US’ largest city despite the COVID-19 teleworking trend. This is the largest real-estate purchase in the US for an office building since the beginning of the global spread of COVID-19, the Wall Street Journal quoted Real Capital Analytics as saying. Google already rents the premises in Manhattan, which are located on the site of a former railroad terminal in the Hudson Square neighborhood. The Silicon Valley giant envisions a campus with a total surface area of 160,000m2 by mid-2023
‘CORE VALUES’: The contract chipmaker did not specify why the employees were dismissed, but media reports said they had leaked information about customer orders Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has fired seven of its employees for violating the company’s “core values,” the world’s largest contract chipmaker said yesterday. While the company did not disclose exactly why it fired the seven employees, local media reports earlier in the day said that the employees had leaked confidential information about customer orders. In a statement, the company said that it fired the seven at once, adding that it released an internal notice last week to inform the entire company of the move ahead of the four-day Mid-Autumn Festival holilday, which ended on Tuesday. TSMC said it fired the seven
Cash-strapped developer China Evergrande Group (恆大集團) has begun repaying investors in its wealth management products with real estate, said Hengda Real Estate Group Co Ltd (恆大地產), its main unit. Evergrande, with more than US$300 billion in liabilities, is in the throes of a liquidity crisis that has left it racing to raise funds to pay its many lenders and suppliers. It has a bond interest payment of US$83.5 million due on Thursday. The company said on WeChat on Saturday that investors interested in redeeming wealth management products for physical assets should contact their investment consultants or visit local offices. Financial news outlet Caixin on
MILD ADJUSTMENT: Two previous efforts failed to curtail mortgage financing, although the new measures should not affect property prices, the central bank governor said The central bank yesterday tightened credit controls for second-home mortgages in specific areas and purchases of plots of land, especially in industrial parks. However, the nation’s top monetary policymaker kept its policy rate at a record-low 1.125 percent for the sixth consecutive quarter, despite revising up its GDP growth forecast for this year from 5.08 percent to 5.75 percent. “Board members factored in economic uncertainty at home and around the world,” central bank Governor Yang Chin-long (楊金龍) said, adding that growing inflationary pressure was a temporary phenomenon induced by bad weather and a low base effect for oil prices. International fuel price increases