Central Bank inclined to maintain full bank deposits guaranty until 2010.

Taipei, Sept. 3, 2009 (CENS)--Although the Financial Supervisory Commission (FSC) recently proposed to shorten full bank deposits guaranty and reduce the guaranty amount, the central bank here tends to maintain the earlier policy of giving the full guaranty for deposits in the banking system to 2010.

The policy, aimed at stabilizing the domestic financial market after the global financial tsunami, has been implemented since October of 2008 and originally would expire at the end of this year. FSC has earlier approved the proposal raised by the Central Deposit Insurance Corp. (CDIC) to extend the full guaranty for bank deposits by one more year to 2010.

However, the devastated Typhoon Morakot has caused severe damage in southern Taiwan and the government urgently needs massive funds for mudslide relief and rehabilitation, so it recently instructed the FSC to study the possibility of shortening the span of full guaranty for bank deposits.

Accordingly, the FSC has proposed to halve the full-year deposits guaranty for 2010 to only six months, but the proposal was recently objected by the central bank since the latter hopes to maintain the earlier policy to reinforce public confidence in the banking system.

Perng Fai-nan, governor of the central bank, indicated that Taiwan's economic climate is now still not very clear and people's confidence in the financial market is not strong enough, so it's necessary for the government to keep backing the banks here.

Based on the estimates of international forecast institutions, Perng said that the large-scale economies like the United States and Europe would see next year their economic recovery back to the level seen before the global financial tsunami; while the small-sized ones like Asia's four little dragons--Taiwan, Singapore, South Korea and Hong Kong would see the recovery occur a year later in 2011. So, he believes that the government's extending guaranty in bank deposits may help stabilize the financial environment here.

((JL)) (GE)

Top five banks based on deposits rise, from Dec. 2008 to July 2009

Bank                                 Increased amount   Increasing
                                         (NT$B)          rate (%)

Cathay United Bank                       119.779            9.7
Bank of Taiwan                           310.766            9.4
Mega International Commercial Bank       114.99             7.7
E. Sun Bank                              46.34              6.3
Taipei Funbon Commercial Bank            61.637             5.9

Source: FSC

Top five banks based on deposits drop, from Dec. 2008 to July 2009

Bank                            Decrease amount  Decreasing
                                     (NT$B)        rate (%)

Jih Sun International Bank          31.382          18.0
Citibank (Taiwan)                   17.81           12.6
Cosmos Bank                         12.225          9.9
Bank of Kaohsiung                   9.635           6.3
Bank of Taipei                      1.722           5.0

Source: FSC