Featured Product

    FSC Taiwan Extends Payment Deferrals, Announces Stress Tests for Banks

    February 09, 2021

    FSC Taiwan extended the timeline for COVID-19-related payment deferrals from December 31, 2020 to June 2021. The relief measures apply to home loans, auto loans, unsecured consumer loans, and credit card debt. In a separate statement, FSC Taiwan announced that 36 domestic banks will be required to conduct the regulatory stress tests in 2021. This round of domestic bank stress tests will adopt both mild and severe scenarios. This round of stress tests will, for the first time, test capital adequacy under operational risk stress scenarios (both mild and severe), which assume that a bank is subject to an enforcement action and has been required to increase its operational risk capital.

    The stress tests will be based on financial reports’ capital adequacy data of the end of 2020. Among others, the stress tests will be conducted to understand how the financial resilience of domestic banks will be affected by low interest rates and the continuing impact of COVID-19. By employing consistent stress test scenarios, banks will calculate the degree to which capital adequacy ratios and leverage ratios have changed. The overall stress scenario will measure whether banks have sufficient risk-bearing capacity to withstand:

    • Increased losses resulting from a number of stress factors such as falling economic growth rates in Taiwan, the US, the eurozone, mainland China, and Japan; rising domestic unemployment; and declining real estate prices, which result in increased credit risk and sharper volatility on bond, stock, exchange, and commodity markets, which in turn cause increased losses.
    • Impact on earnings, caused by a narrowing in net interest rate spreads and a decline in fee incomes.

     

    Related Links

    Keywords: Asia Pacific, Taiwan, Banking, Stress Testing, COVID-19, Credit Risk, Payment Deferrals, Operational Risk, Regulatory Capital, Basel, FSC Taiwan

    Featured Experts
    Related Articles
    News

    ESAs Issue Multiple Regulatory Updates for Financial Sector Entities

    The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.

    November 15, 2022 WebPage Regulatory News
    News

    ISSB Makes Announcements at COP27; IASB to Propose IFRS 9 Amendments

    The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.

    November 10, 2022 WebPage Regulatory News
    News

    IOSCO Prioritizes Green Disclosures, Greenwashing, and Carbon Markets

    The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.

    November 09, 2022 WebPage Regulatory News
    News

    EBA Finalizes Methodology for Stress Tests, Issues Other Updates

    The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups

    November 09, 2022 WebPage Regulatory News
    News

    OSFI Sets Out Work Priorities and Reporting Updates for Banks

    The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.

    November 07, 2022 WebPage Regulatory News
    News

    APRA Finalizes Changes to Capital Framework, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.

    November 03, 2022 WebPage Regulatory News
    News

    BIS Hub and Central Banks Conduct CBDC and DeFI Pilots

    The Bank for International Settlements (BIS) Innovation Hubs and several central banks are working together on various central bank digital currency (CBDC) pilots.

    November 03, 2022 WebPage Regulatory News
    News

    ECB Sets Deadline for Banks to Meet Its Climate Risk Expectations

    The European Central Bank (ECB) published the results of its thematic review, which shows that banks are still far from adequately managing climate and environmental risks.

    November 02, 2022 WebPage Regulatory News
    News

    ESAs, ECB, & EC Issue Multiple Regulatory Updates for Financial Sector

    Among its recent publications, the European Banking Authority (EBA) published the final standards and guidelines on interest rate risk arising from non-trading book activities (IRRBB)

    October 31, 2022 WebPage Regulatory News
    News

    EC Adopts Final Rules Under CRR, BRRD, and Crowdfunding Regulation

    The European Commission (EC) recently adopted regulations with respect to the calculation of own funds requirements for market risk, the prudential treatment of global systemically important institutions (G-SIIs)

    October 26, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8582