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.
The Investment Commission yesterday approved a Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) application to invest an additional US$3.5 billion in its Arizona subsidiary to manufactured advanced chips. The world’s largest contract chipmaker’s board of directors last month approved the funding project after TSMC started moving manufacturing equipment into the fab in December last year in preparation for the production of 4-nanometer chips next year. TSMC said it has also commenced the second phase of facility construction in Arizona. The second fab is to produce semiconductors using 3-nanometer technology in 2026. Altogether, TSMC plans to spend US$40 billion on the Arizona fabs, doubling its
KEY SECTOR: Taiwan’s new chip legislation is insufficient, and a more strategic ‘chip act’ that covers the whole semiconductor ecosystem is needed, MediaTek’s chairman said MediaTek Inc (聯發科) chairman Rick Tsai (蔡明介) yesterday urged the government to formulate a state semiconductor strategy and comprehensive “chip act” that includes local chip designers and smaller-scale semiconductor companies, as they are facing intensifying competition from China. The government is playing an increasingly important role in safeguarding the local semiconductor industry’s competitiveness, given that the US, the EU and Japan are offering hefty subsidies and significant tax incentives to build semiconductor capacity domestically, as they have realized the strategic importance of semiconductors, Tsai said. To implement such a program, the government should take steps to finance a “chip act,” Tsai said
Microsoft Corp has threatened to cut off access to its Internet search data, which it licenses to rival search engines, if they do not stop using it as the basis for their own artificial intelligence (AI) chat products, people familiar with the dispute have said. The software maker licenses the data in its Bing search index — a map of the Internet that can be quickly scanned in real time — to other companies that offer Web search, such as Apollo Global Management Inc’s Yahoo and DuckDuckGo. Last month, Microsoft integrated a cousin of ChatGPT, OpenAI’s AI-powered chat technology, into Bing. Rivals
MOUNTING PRESSURE: Although bank failures in the US and Europe would not cause systemic risks, it would dampen consumers’ willingness to spend, GlobalWafers said GlobalWafers Co (環球晶圓), the world’s third-largest silicon wafer supplier, yesterday said that the financial turmoil in the US and Europe has dimmed the outlook for chip demand in the second half of this year, as growing economic uncertainty could dampen consumer spending. The Hsinchu-based wafer manufacturer said it is seeing greater pressure from economic uncertainty on the industry’s recovery, as customers would have not expected Silicon Valley Bank, Signature Bank and a tier-one bank like Credit Suisse Group SA to collapse suddenly. Although the failures are unlikely to cause systemic risks, consumers would be cautious of spending on non-essential items, such