Fitch: Concerns about Taiwanese banks

Fitch Ratings commented on the spate of Taiwanese bank failures, following the recent failure and default by Bowa Bank in August, as well as the failure and default by Chinese Bank in January 2007.

While Fitch said it does not rate these failed banks and many other small and under-capitalized banks, it has continued to maintain its surveillance on these banks as a part of its commitment to provide comprehensive credit research on the Taiwanese banking industry.

From 2006 to date, the deterioration of the financial health of smaller and undercapitalized Taiwanese banks has quickened due to intensified market competition from larger banking groups, continued interest margin compression and fresh losses incurred from the unsecured consumer lending crisis in 2006, the agency said. This has led to a tightening of market liquidity, as well as a rapid loss of confidence from the retail depositors.

Fitch said it views smaller Taiwanese banks as generally weak in capital and liquidity as well as profitability. The agency said it is concerned that these banks would increasingly weigh down the overall banking system and make the system vulnerable to a credit cycle downturn.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.