Taiwanese financial institutions’ exposure to financially troubled Credit Suisse is not significant, the Financial Supervisory Commission (FSC) said yesterday, amid mounting concerns over the local financial sector’s overseas exposure.
As of the end of January, Taiwan’s banking, insurance and securities industries’ exposure to the Swiss bank totaled NT$157.3 billion (US$5.15 billion), data from the financial regulator showed.
Insurance firms had the largest exposure at NT$108.2 billion, but it represented only 0.35 percent of the sector’s total investable funds, the commission said.
Photo: CNA
The commission did not detail the types of financial instruments held by local financial institutions, but it said Credit Suisse had issued 27 bonds denominated in foreign currencies on the Taipei Exchange.
Those bonds have a current balance of US$2.109 billion, accounting for 1.01 percent of the total bonds in circulation on the Taipei Exchange’s international bond market, with life insurers the main buyers, the commission said.
Credit Suisse on Tuesday said it found “material weakness” in its internal financial reporting controls, as it scrapped bonuses for top executives in the wake of its worst annual performance since the global financial crisis.
The local banking sector’s exposure to Credit Suisse declined late last year, falling to NT$48.9 billion by the end of the year from NT$55.3 billion at the end of October, the commission said.
Its exposure to the Swiss bank accounted for only 0.4 percent of its total overseas exposure of more than NT$12 trillion, the commission said, adding that it would continue to monitor the situation and keep a close eye on the Swiss bank’s financial condition.
The local securities sector’s exposure to Credit Suisse totaled NT$197 million as of the end of last month, accounting for less than 1 percent of the sector’s net worth, the commission said.
At least seven Taiwanese banks serve as sales agents for Credit Suisse’s financial products, the regulator said.
As of the end of December last year, clients of those banks owned NT$67.4 billion in financial bonds and structured financial products sold by Credit Suisse, down NT$25.1 billion from the end of October, the commission said.
The seven local banks that sold Credit Suisse’s products have risk control measures in place, and if their clients want to redeem their investments, those banks were not likely to suffer liquidity risks, it said.
In addition, as of the end of last month, local investors had NT$4.63 billion in exposure to Credit Suisse through mutual funds, accounting for 0.13 percent of Taiwanese’s total investment in overseas mutual funds, it said.
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