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Financial Stability Report Reveals Capital Adequacy Ratios Exceed Minimum Requirements
Taipei, Taiwan - The Financial Supervisory Commission (FSC) has released its latest financial stability report, which shows that capital adequacy ratios of domestic banks have exceeded minimum requirements in both mild and serious scenarios. This indicates that banks have the capacity to absorb risks to some extent.
Capital Adequacy Ratios Exceed Minimum Requirements
The FSC’s stress test results, conducted as of 2015, revealed that even under a relatively serious scenario, the average common equity ratio, Tier 1 capital ratio, capital adequacy ratio, and leverage ratio of 37 domestic banks were all higher than the minimum requirement for 2016. This suggests that banks have been prudent in their risk management and are well-positioned to withstand potential shocks.
Strengthening Solvency and Risk Management
In related news, the FSC has taken steps to strengthen solvency and risk management in the insurance industry. In January 2016, the regulator took over ailing Chaoyang Life Insurance Co., Ltd., and entrusted the Taiwan Insurance Guaranty Fund (TIGF) with holding a public auction. By January 2017, Nan Shan Life Insurance Co., Ltd. had acquired the company.
Enhancing Internal Audit and Control Systems
The FSC has also implemented measures to improve internal audit and control systems at financial institutions. Amendments made in July 2016 and March 2017 included:
- Adopting a risk-based internal audit system
- Reinforcing the functions of the board of directors and audit committee
- Enhancing internal guidelines for handling material contingencies
- Introducing new reporting requirements
Strengthening Cybersecurity Measures
In response to recent distributed denial-of-service (DDoS) attacks on securities companies, the FSC has strengthened cybersecurity measures. The regulator has required financial institutions to implement stronger cybersecurity measures and established a platform for reporting cyber-attacks.
Reinforcing Public Tender Offer Systems
The report also highlights the importance of reinforcing public tender offer systems. In November 2016, the FSC introduced amendments to related regulations to improve transparency and protect investors’ rights.
Conclusion
Overall, the FSC’s latest report demonstrates its commitment to maintaining financial stability in Taiwan by strengthening risk management, improving internal controls, and enhancing cybersecurity measures.