How has the financial crisis affected to regulatory environment of Taiwan’s banking sector?
1.The global trends in financial supervision and regulation have turned into active supervision from the relaxation and liberalization of financial regulations prior to the global financial crisis. The main measures include the strengthening of capital adequacy ratio, liquidity, asset quality, consumer protection, and the active supervision on bankers’ salary policy and money laundering.
In response to the financial crisis, the Taiwan government also took some measures to avoid from systematic crisis, such as extending the period of the full guarantee on deposit to the end of 2010, raising the guarantee ratio provided by the Small and Medium Enterprise Credit Guarantee Fund, and so on.
2. According to the figures as follows, Taiwan’s financial institutions are currently much sounder compared to the situation in June 2008 (prior to the financial crisis), which substantiates the effectiveness of these measures taken by the Taiwan government.
(1) The average Non-Performing Loan (NPL) ratio of the domestic banks declined to 0.58﹪in Feb. 2011 from 1.55﹪in Jun. 2008. And the coverage ratio raised to 162.31﹪from 67.35% during the same period.
(2) The total outstanding loans amounted to NT$20,355 billion in Feb. 2011 from NT$18,110 billion in Jun. 2008, revealing no credit contraction among banks.
(3) The BIS ratio (or capital adequacy ratio) of domestic banks rose to 11.97% in Dec. 2010 from 10.89% in Jun. 2009.