The head of Taiwan Ratings Corp (中華信評) asserted yesterday that government moves to securitize bank assets would not remedy Taiwan's huge bad loan problems anytime soon.
"Launching asset-backed securities is not going to solve Taiwan's non-performing loans (NPLs) problem in the short-term," said Taiwan Ratings President and CEO Chen Chung-hsing (
Chen made the comment at a press conference jointly held yesterday by Taiwan Ratings and its parent company Standard & Poor's (S&P).
Asset securitization, a mechanism whereby banks can repackage collateral and sell it to investors as securities, is expected to help increase liquidity for banks. The market for asset-backed securities in the Asia Pacific has been tripled in four years, with Japan, Korea and Australia being most active in this business, said Calvin Wong (
According to government estimates, Taiwan's domestic asset securitization market exceeds NT$4 trillion. To develop this business, the nation can build on experiences gained in market development elsewhere in the region, like Japan and South Korea, said Diane Lam (林潔婉), an S&P director for structured finance ratings.
But the situation varies from country to country and Taiwan has to find its own way of developing the mechanism, Lam said.
While former Minister of Finance Yen Ching-chang (
"It will take time and a lot of effort to set up the [asset securitization] mechanism," Chen said.
To set up a new asset-backed securities market, it may need a period of three to five years in building up a benchmark for the market, Wong said. "[The issue of] securitization is all about details."
Taiwan's banking industry currently holds more than NT$1.64 trillion NPLs, according to official figures released by the Ministry of Finance.
The government is currently proposing a draft to legalize asset-backed securities, and is expected to submit the draft to the Legislative Yuan in the first half of the year, said Council of Economic Planning and Development advisor Lee Kao-chao (
Though S&P strongly supports Taiwan's new securitization legislation, Wong said it is not a quick fix for Taiwan's current financial problems including NPLs and the nation may have to develop a set of viable measures required by the mechanism before it can start to work.
"There's no free lunch for either practicing asset-backed securitization or dealing with NPLs. Someone still has to pay the bill," he said.
Moreover, Wong said some of the challenges facing Taiwan are "the introduction of the necessary legal and regulatory infrastructure" and "improving the economies of securitization from the standpoint of issuers, advancing securitization technology, continually developing a domestic investor base and implementing financial market reform."
To shed some light on this complex form of financing and its impact on Taiwan's financial markets, both Taiwan Ratings and S&P have invited several government officials, legislators, lawyers, foreign institutional investors and analysts for a seminar from 9am to 5pm today at the International House, Taipei.
ENDEAVOR MANTA: The ship is programmed to automatically return to its designated home port and would self-destruct if seized by another party The Endeavor Manta, Taiwan’s first military-specification uncrewed surface vehicle (USV) tailor-made to operate in the Taiwan Strait in a bid to bolster the nation’s asymmetric combat capabilities made its first appearance at Kaohsiung’s Singda Harbor yesterday. Taking inspiration from Ukraine’s navy, which is using USVs to force Russia’s Black Sea fleet to take shelter within its own ports, CSBC Taiwan (台灣國際造船) established a research and development unit on USVs last year, CSBC chairman Huang Cheng-hung (黃正弘) said. With the exception of the satellite guidance system and the outboard motors — which were purchased from foreign companies that were not affiliated with Chinese-funded
‘CROWN JEWEL’: Washington ‘can delay and deter’ Chinese President Xi Jinping’s plans for Taiwan, but it is ‘a very delicate situation there,’ the secretary of state said US President Donald Trump is opposed to any change to Taiwan’s “status quo” by force or extortion and would maintain that policy, US Secretary of State Marco Rubio told the Hugh Hewitt Show host on Wednesday. The US’ policy is to maintain Taiwan’s “status quo” and to oppose any changes in the situation by force or extortion, Rubio said. Hewitt asked Rubio about the significance of Trump earlier this month speaking with Taiwan Semiconductor Manufacturing Co (台積電) chairman C.C. Wei (魏哲家) at the White House, a meeting that Hewitt described as a “big deal.” Asked whether the meeting was an indication of the
PERMIT REVOKED: The influencer at a news conference said the National Immigration Agency was infringing on human rights and persecuting Chinese spouses Chinese influencer “Yaya in Taiwan” (亞亞在台灣) yesterday evening voluntarily left Taiwan, despite saying yesterday morning that she had “no intention” of leaving after her residence permit was revoked over her comments on Taiwan being “unified” with China by military force. The Ministry of the Interior yesterday had said that it could forcibly deport the influencer at midnight, but was considering taking a more flexible approach and beginning procedures this morning. The influencer, whose given name is Liu Zhenya (劉振亞), departed on a 8:45pm flight from Taipei International Airport (Songshan airport) to Fuzhou, China. Liu held a news conference at the airport at 7pm,
KAOHSIUNG CEREMONY: The contract chipmaker is planning to build 5 fabs in the southern city to gradually expand its 2-nanometer chip capacity Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, yesterday confirmed that it plans to hold a ceremony on March 31 to unveil a capacity expansion plan for its most advanced 2-nanometer chips in Kaohsiung, demonstrating its commitment to further investment at home. The ceremony is to be hosted by TSMC cochief operating officer Y.P. Chyn (秦永沛). It did not disclose whether Premier Cho Jung-tai (卓榮泰) and high-ranking government officials would attend the ceremony. More details are to be released next week, it said. The chipmaker’s latest move came after its announcement earlier this month of an additional US$100 billion
RSS