Fubon Financial Holding Co (富邦金控) yesterday said that it would not accept rubles for interest payments for the Russian bonds it holds, as the terms of the bonds explicitly stipulate that the interest should be paid in US dollars.
It would seek to minimize its losses by negotiating with custodian banks and “take action together,” the financial services provider told an investors’ conference.
The comments came after Russia on March 5 said that it would pay sovereign and corporate debtors in rubles if they are from countries that have acted in an “unfriendly manner” to Russia after Moscow on Feb. 24 launched an invasion of Ukraine.
Photo: Wu Chi-lun, Taipei Times
Moscow included Taiwan on the list.
Fubon Life Insurance Co (富邦人壽) booked credit losses of NT$2.2 billion (US$77.46 million) for its Russian bonds, but the unit said that it would continue to evaluate the risks of defaulting on payment of principle and interest, and whether to recognize more losses.
Fubon Life Insurance had NT$15.4 billion of exposure to Russia as of the end of last month, accounting for less than 0.5 percent of its total assets, it said.
Most of the exposure is in Russian government bonds, with about one-fifth being corporate bonds, it said.
The insurer would not increase its position in Russian bonds, as the invasion has made the market an unsuitable investment target from an environmental, social and corporate governance (ESG) perspective, it said.
It would dispose its Russian holdings when the time is right, Fubon Life Insurance said.
The Financial Supervisory Commission has said that it has eased rules for life insurers that stipulate they sell corporate bonds within six months if the rating of the bonds fall below investment grade, giving Fubon Life Insurance more time to deal with the situation, it said.
Fubon Financial Holding’s net profit was NT$144.6 billion last year, up 60 percent from a year earlier, or earnings per share of NT$12.49, the highest among the nation’s 15 financial conglomerates, company data showed.
It has not determined its dividend distributions for this year, but “would be able to reflect the annual growth in our profit last year,” Fubon Financial Holding president Jerry Harn (韓蔚廷) said.
Expected rate hikes would buoy the group’s profitability, as it would receive more interest income, it said.
Fubon Life Insurance expects double-digit percentage growth in first-year premiums this year, it said.
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