Taiwan mulls plan to buy bank stakes, inject capital

28-Feb-2009 Intellasia | Reuters | 8:01 AM Print This Post

Taiwan’s financial regulator is considering measures to support the island’s banks, such as injecting capital or buying stakes in them, amid a deepening global economic downturn, an official said on Thursday.

Any potential action would come as the US and British governments have injected billions of dollars into their ailing financial institutions, including Royal Bank of Scotland (RBS.L: Quote, Profile, Research), which earlier reported a record loss for a British company of 24 billion pounds (US$34.3 billion) for 2008.

A man smokes in front of a fashion advertisement near an employment agency in Taipei February 26, 2009. Taiwan is due to announce its seasonally adjusted jobless rate for January later on Thursday, which analysts say will climb further after it hit a 5-1/2-year high of 5 percent in December 2008. (Reuters)

“The severe downturn is hitting Taiwan banks pretty hard. If this doesn’t improve soon, we need to have some measures in place,” Shiau Chang-ruey, a chief secretary of the Financial Supervisory Commission, told Reuters by phone.

“We’ll think about these possible measures and decide whether to carry out them as soon as possible,” said Shiau, adding that any such plans would be subject to cabinet approval.

Another plan being considered could see the government buy banks’ non-performing debts, he said.

Taiwan banks have suffered millions of dollars in losses related to the global crisis. But their overall losses have been much smaller in general than many of the worst-hit banks in Europe and the United States.

Taiwan’s financial sector sub-index ended down 0.7% on Thursday, extending its slide to 17% so far in 2009, while the broader index.TWII has lost 1.6%.


Category: Taiwan

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