Taiwan Stock Leverage Crisis? FSC Reveals Real Situation of 'Four Loans in One', Daily Supervision Tightly Monitors Two Major Indicators

Recently, Taiwan's stock trading has been active, and some investors have expanded leverage through home loans, car loans, consumer loans, stock financing, or stock pledging, even leading to the situation known as 'Four Loans in One'. Wang Yunzhong, deputy director of the Banking Bureau of the FSC, said that after the FSC recently understood the personal credit situation of some banks, it was found that customers holding multiple loans accounted for a 'very low' proportion of the overall personal financial customers. Currently, the overall credit risk of banks is still within a controllable range. Wang Yunzhong said at a regular press conference today that the FSC continues to monitor the use of personal loan funds. Currently, banks handle investment and financial-related credit, mainly for secured credit such as home loans and car loans. Banks are very cautious in assessing borrowers' repayment ability, the quality of collateral, and post-loan management, and the overall credit model is still quite cautious. Regarding concerns about the public simultaneously bearing multiple loans such as home loans, car loans, and consumer loans to invest in the stock market, Wang Yunzhong pointed out that the FSC has specially understood the relevant situation from some banks and found that customers holding home loans, car loans, and small consumer loans at the same time account for a low single-digit percentage of the overall personal financial customers. As for the actual number of cases and their proportion, it is not convenient to disclose them to the public. He emphasized that for customers with multiple loans or high debt-to-income ratios, various banks have strengthened credit review and risk management. From the perspective of overall asset quality, the non-performing loan ratio of domestic banks has remained between 0.14% and 0.16% from last year to the end of June this year, with no significant fluctuations. Therefore, the overall credit risk still meets the supervision requirements. Wang Yunzhong said that in order to grasp the situation of the public using home loans or revolving funds to invest in the stock market, personal revolving funds include multiple credit items such as financial home loans, stock pledging, and credit loans. In practice, it is difficult to cut off a single item alone. Therefore, the FSC does not just observe a single item, but monitors through overall risk indicators. Wang Yunzhong explained that the current daily supervision will focus on the two aspects of 'abnormal business growth' and 'significant changes in risk indicators' as the key points, and continue to track indicators such as home loans, stock financing, personal credit, and non-performing loan ratios. Once abnormal growth deviates from the norm or risks significantly increase, banks will be required to provide explanations and take improvement measures. If necessary, further cooperation with the inspection bureau or relevant units will be carried out to deeply understand the situation of individual cases. In addition to strengthening daily supervision, the FSC is also planning to establish a 'cross-industry defense mechanism' between banks and the securities industry, hoping to reduce the credit risk brought by investors' excessive leverage. Wang Yunzhong said that the current credit center has established an information exchange mechanism between banks, securities firms, and the insurance industry. Banks can inquire through the credit center whether customers have negative information such as defaults on the securities side, but the current exchange content is relatively limited and mostly simple data. He pointed out that in the future, the planning will be carried out in the direction of two-way information exchange, and the exchange content will be expanded under the existing platform architecture. Currently, practical needs are being collected from banks, and it is being discussed which information can help strengthen risk management, hoping to propose a specific plan as soon as possible. As for the concern of the outside world about whether the new mechanism involves the 'Personal Data Protection Act', Wang Yunzhong said that the relevant data exchange will obtain customer consent and comply with the current personal data protection regulations. The current focus is on establishing a more perfect information exchange mechanism, not a legislative issue.