The Financial Supervisory Commission of Taiwan (FSC Taiwan) published results of the supervisory stress tests for 2021 and decided to postpone the implementation of final Basel III standards for one year, to 2024. This announcement is in response to the COVID-19 pandemic and is in line with the March 2020 announcement by the Basel Committee of Banking Supervision (BCBS) on the deferral of implementation date of the final Basel III standards by one year. FSC Taiwan highlighted that it will adjust the implementation schedule for the final Basel III standards after taking into account the practices in different countries. In addition, FSC Taiwan is amending the regulations governing information to be published in annual reports of public companies in 2020 to require companies to disclose environmental, social, and governance (ESG) related information.
To further improve the quality of ESG information disclosure and provide more comparable information, FSC Taiwan will revise the annual report schedules and add reference examples and disclosure guidelines to guide companies to disclose more important environmental and social issues, such as the quantitative information of carbon emissions, water consumption, and waste. In the social aspect, companies will be required to disclose more specific and quantitative contents such as occupational safety and workplace diversity and equality, to realize the goal of sustainable development of enterprises. Additionally, FSC Taiwan has formulated draft principles on the review and supervision of information disclosures by the Securities Investment Trust Funds in relation to the ESG-related topics. The principles have been drafted to standardize the format of information disclosure by ESG funds and to strengthen the integrity of information disclosure of the prospectus on ESG investment policies. The Securities Investment Trust and Consulting Association has been asked to seek opinion from industry participants on the draft principles and the results of this exercise are expected to be released before the end of July 2021.
FSC Taiwan also published the results of the supervisory stress test for 2021, which showed that the average common equity, tier 1 capital, capital adequacy, and leverage ratios of 36 domestic banks were above the statutory minimum standards. The results indicate that domestic banks have maintained strong capacities for bearing risks and capital adequacy during the pandemic. The overall loan-loss provisions of domestic banks remain relatively high and banks still maintain high capital adequacy. FSC Taiwan had requested 36 domestic banks to conduct the stress tests to understand the impact of the low interest rate environment and the impact of the COVID-19 pandemic on the capital adequacy of domestic banks.
- Press Release on Basel III Implementation (in Chinese)
- Press Release on ESG Disclosures
- Press Release on Stress Test Results
Keywords: Asia Pacific, Taiwan, Banking, Securities, Basel, ESG, Climate Change Risk, Disclosures, COVID-19, Stress Testing, Regulatory Capital, Credit Risk, Market Risk, Diversity and Inclusion, FSC Taiwan
Previous ArticleFED to Release Tool to Help Community Banks Implement CECL
The European Commission (EC) announced plans to defer the application of 13 regulatory technical standards under the Sustainable Finance Disclosure Regulation (2019/2088) by six months, from January 01, 2022 to July 01, 2022.
The Bank of England (BoE) published a consultation paper on approach to setting minimum requirement for own funds and eligible liabilities (MREL), an operational guide on executing bail-in, and a statement from the Deputy Governor Dave Ramsden.
The European Banking Authority (EBA) is seeking preliminary input on standardization of the proportionality assessment methodology for credit institutions and investment firms.
Certain regulatory authorities in the US are extending period for completion of the review of certain residential mortgage provisions and for publication of notice disclosing the determination of this review until December 20, 2021.
The Prudential Regulation Authority (PRA) published the policy statement PS18/21, which introduces an amendment in the definition of "higher paid material risk taker" in the Remuneration Part of the PRA Rulebook.
The European Banking Authority (EBA) published its annual report on asset encumbrance in banking sector.
The European Banking Authority (EBA) published a methodological guide to mystery shopping.
The Australian Prudential Regulation Authority (APRA) released a letter to authorized deposit-taking institutions to provide an update on key policy settings for the capital framework reforms, which will come into effect from January 01, 2023.
The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) published a report that assesses the business continuity planning activities of financial market infrastructures or FMIs.
The European Securities and Markets Authority (ESMA) has responded to the IFRS consultation on targeted amendments to the IFRS Foundation constitution to accommodate an International Sustainability Standards Board (ISSB) to set IFRS Sustainability Standards.