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Capital Efficiency Goal Of Taiwan's FHCs: A Double-Edged Sword Feb 06
Standard & Poors, Feb 2006
Abstract
More efficient use of capital resources within a financial holding company (FHC) group is expected to be a continuing theme in Taiwan. The increasing flexibility of realigning capital resources within a FHC group-with stronger subsidiaries transferring underutilized capital to group members with greater capital requirements, either for expansion or recapitalization-has led to a convergence of capital strength among subsidiaries. In most cases, reallocation activities have strengthened the capitalization of the weaker subsidiaries without significantly damaging the capitalization of the donor subsidiaries. This more efficient use of capital represents one of the key achievements of FHCs in Taiwan since their formation. However, the focus on capital efficiency is likely to raise concerns if the current trend to reduce the retention of...
Companies mentioned in this report are: First Commercial Bank Ltd.,Hua Nan Commercial Bank Ltd.,Fubon Insurance Co. Ltd.,Taipei Fubon Commercial Bank Co. Ltd.,Fubon Securities Co. Ltd.,Yuanta Commercial Bank,Fubon Financial Holding Co. Ltd.,Yuanta Securities Finance Co. Ltd.
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.
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