Banks expect large overseas loan losses

NON-PERFORMING LOANS: While the rate for failing loans at local banks’ foreign branches doubled, the FSC is scrutinizing lending strategies and risk management

Taipei Times
Date: Sep 12, 2020
By: Kao Shih-ching / Staff reporter

Financial Supervisory Commission Chairman Huang Tien-mu, center, speaks to reporters during a visit to First Commercial Bank’s Yenchi Branch in Taipei yesterday.
Photo: CNA

Local banks saw the credit risk of their overseas branches worsen due to the fallout of the COVID-19 pandemic after reporting US$400 million in potential loan losses as of Thursday, double that of a year earlier, Financial Supervisory Commission (FSC) data showed.

FSC rules stipulate that local banks must report possible losses of US$10 million or higher from corporate loan defaults at their overseas branches.

As the commission only received reports of a possible US$200 million in loan losses from the same period last year, banks this year seem to be encountering higher credit risks amid the COVID-19 pandemic, Banking Bureau Deputy Director-General Lin Chih-chi (林志吉) told a news conference in New Taipei City on Thursday.

Local banks’ overseas branches over the past few years have more aggressively participated in international syndicated loans, leading to a higher risk of bad loans, Lin said.

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