Regulators in Taiwan
Financial institutions in Taiwan are required to report to the following organisations:
Regulatory Environment — Taiwan
Balance sheet reporting
Balance sheet reporting covers a summary of the financial balances or relevant financial information of a reporting institution, based on Taiwan’s accounting principle (TWGAAAP 34 – Accounting for Financial instruments) which is also in line with IAS39. These reports are required to be submitted to the following bodies: Central Bank of the Republic of China (Taiwan) or CBC (Taiwan) in short, Department of Financial Inspection, the Offshore Banking Unit, the Bureau of Monetary Affairs, Ministry of Finance (MoF), and the Department of Economic Research.
These reports generally include information on assets and liabilities, net worth or retained earnings, profit and loss over a period of time, average balance sheet positions and statement of cash flows broken down by maturities in TWD and non-TWD. Other major reports in this category include interest rate sensitivity analysis information reports, assets quality, and material financial business summary/profitability summary, etc.
Capital adequacy reporting (CAR)
The Taiwan Financial Supervisory Commission implemented Basel II from 2007. Basel II requires capital reserves to be aligned against carefully measured levels of credit risk and operational risk. The Basel II Accord requires banks to keep capital for credit risk for banking book exposures and market risk for trading book exposures. As a result, banks may be forced to hold more capital than current rules demand to guard against losses on some kind of complex financial products.
Large exposures reporting
Large exposures reporting requirements are requested by different departments of the CBC (such as Bureau of Monetary Affairs, Department of Economic Research, etc). These reports collect information on large credit analysis (in TWD or Non-TWD), deposit account movement over 200 million every 10 days and monthly, loan account movement over 300 million, derivatives outstanding (by non-residents with threshold over TWD 300 million), foreign currency deposit balance (by individual customers above USD1 million equivalent), and reports on top five largest net foreign exchange position.
All banks in Taiwan are required to submit liquidity reports to the CBC (Taiwan) and Department of Banking. It includes reports with detailed information on status of liquidity and deposit reserves. The CBC has set a minimum liquidity reserves ratio for financial institutions to ensure that sufficient liquid assets are maintained to meet their deposit liabilities. The Bank is also required to maintain the required deposit reserve amount in the deposit reserve account within the applicable maintenance period.
Locational Banking Statistics -LSB (BIS Paper 18)
The purpose of the LSB report is to gather information of a bank’s external claims and liabilities. It also provides a basis for the preparation of balance of payment and external debt reports. The CBC (Taiwan) consolidates information from the reporting institutions of Taiwan and then submits the relevant information to the BIS.
Foreign exchange reporting
This type of reporting mainly collects information on foreign currency positions (spot, forward) and derivates position on daily basis, monthly inward and outward remittances volume with PRC, foreign currency transaction daily, and adjustment reports on foreign exchange deposit reserve, etc.
Derivatives reporting include volume reports on Foreign exchange (FX) deals and derivatives commodities transactions arising from the applicable reporting period (based on the contract date). These volume reports are required to be submitted to the relevant regulator or departments, such the Bureau of Foreign Exchange of the CBC (Taiwan), Offshore Banking Unit, and the Banking Bureau (FSC).
Firms are faced with investing time, effort and resource to:
So how can we help you?
Wolters Kluwer Financial Services provides regulatory reporting solutions throughout the world for banks, insurance companies, and other financial institutions. By leveraging a global data model (DataFoundation), a standardised integral development environment, fully integrated calculation capabilities and a global runtime engine for reporting, we can provide local reporting efficiently consistently for any jurisdiction.
The main benefits of the our regulatory reporting solution include:
As leaders in the field of risk and regulatory solutions Wolters Kluwer Financial Services understands your business needs. Our heritage in and in-depth knowledge of the financial market enables the development of our solutions to be so flexible that they meet the needs of ALL firms whatever the size or complexity.
Wolters Kluwer Financial Services leads the way in risk and regulatory compliance solutions and can provide full coverage to all banks legally bound to report to the Central Bank of China and the Financial Supervisory Commission.
Asset & Liability Management (ALM)
ALM is being embraced as more than just a tool to monitor and manage interest rate risk in the banking book. It is a process for managing balance sheets against other risks that affect earnings and portfolio valuations of banks, shifts in customer behavior, future balance sheet growth, and impact of business strategies (pricing, hedging, growth, and planning).
In light of the financial crisis, firms of all shapes and sizes are re-evaluating their ALM model. In order to earn an adequate return, the need to assess and mitigate the adverse value and income impact of changes in the market has become even more vital.
So how do different types of financial institutions manage their ALM requirements today?
Large, tier one firms typically develop their ALM systems in-house, a luxury few smaller firms can’t afford. These systems typically include sophisticated and finely tuned functionality for value exposure, value-at-risk, dynamic simulation, earnings-at-risk, and treasury view.
In the past, smaller firms have found solutions for meeting ALM requirements to be over-complicated, difficult to integrate with incumbent systems, resource-dependent and cost-prohibitive. For these reasons they have resorted to using alternative methods such as spreadsheets or independent consultants, neither of which is ideal.
Until now the sheer cost of developing and supporting an in-house ALM system has been restrictive to smaller firms but the need to have accurate visibility into the future position of the firm is critical.
Our heritage and in-depth knowledge of the market have enabled the configuration of our solution to be so flexible that it meets the needs of ALL firms; from those with highly complex derivatives to those with a vanilla approach.
Our ALM solution provides a comprehensive range of capabilities covering the following areas:
And for the smaller firm
Our rich ALM solution offers functionality that delivers immediate return on investment by taking a ‘compact’ approach with risk management features that absorb complexity. Along with evaluating a mismatch between assets and liabilities, our ALM solution also manages risks arising due to liquidity and interest rate in banking books.
With our ALM solution firms can:
The 6-step process for ALM
Embracing advanced Basel II approaches and capital management practices
The Financial Supervisory Commission (FSC) of Taiwan implemented Basel II in 2007 to strengthen risk management of domestic banks and harmonize banks capital adequacy with that of the international standards.
The average capital adequacy of banks in Taiwan was 11.97% at the end of 2010.
Banks need to submit business plans, internal capital adequacy assessments, and demonstrations of their risk assessments to FSC under Pillar 2 standards. Banks disclose their qualitative and quantitative risk information under Pillar 3 to enhance market discipline and to provide better oversight of corporate operations and governance as well as contribute to the soundness of the financial system.
Our solution provides a sophisticated Basel II module with the ability to calculate the capital charge for credit risk, market risk and operational risk. It can be used as an independent stand alone solution or in combination with our other reporting and risk management solutions assisting banks to meet regulatory requirements and improve their performance over risk.
The Financial Supervisory Commission (FSC) of Taiwan established a task force on May 14 2009 for adoption of IFRS in Taiwan.
The adoption of IFRS in Taiwan is planned in 2 phases.
All public companies are required to pre-disclose information regarding IFRS adoption plans and the impacts on their financial reports prior to the adoption phase. Our IFRS solution enables classification of financial instruments and calculation of valuations using appropriate fair values or amortised costs. It also supports several methods for testing and estimating impairment as required by IAS 39.
Liquidity Risk Management
Banks are interested in going beyond simple static financial ratios and gap reports as the measures of their liquidity risk. Since the Basel Committee on Banking Supervision issued its final paper on ‘Principles for Sound Liquidity Risk Management and Supervision’ banks have been adopting liquidity stress testing scenarios to simulate bank-specific and system risks to their balance sheet. By modelling their liquidity contingency plans against such scenarios, a measure of the bank’s cash-flow survival horizon can be derived, giving a statement of the effectiveness of the bank’s plan against such crisis.