Taiwan Not Planning New Risk Controls for Exposure to Chinese Property Market

TAIPEI (Reuters) – Taiwan’s leading financial regulator plans to maintain its current stance and will not introduce any enhanced risk control measures for banks and insurers with exposure to the Chinese real estate market, attributed to their substantial loan loss provisions, according to two sources familiar with the situation.

China is grappling with a deepening crisis in its property sector, facing challenges like a liquidity crisis at Country Garden, the largest private developer in the country, while trying to rejuvenate the slowing recovery of the world’s second-largest economy.

The Financial Supervisory Commission (FSC) of Taiwan has not suggested additional steps to mitigate risk exposure for financial institutions but is actively monitoring the evolving landscape of China’s real estate market, the sources disclosed. They requested anonymity as they were not authorized to communicate with the media.

According to one source, Taiwanese banks possess a significant amount of loan loss provisions, which positions them favorably to weather any potential crisis. “Taiwanese banks have already taken steps to reduce their risks,” the source noted.

The exposure of Taiwanese insurers to China stood at T$94.7 billion (approximately $2.97 billion) as of June. FSC chairman Tien-mu Huang stated last week that while the financial industry’s investments and exposure to Country Garden are limited, vigilance remains essential in light of any developments in the situation.

($1 = 31.9180 Taiwan dollars)