萬國法律事務所

The Financial Supervisory Commission (“FSC”) announced on November 18, 2014 that starting from 2015, the FSC will require domestic banks to increase their contribution rate for real estate loan loss provision from 1% to 1.5% (“Increase in Contribution Rate”), as a preparation for future economic down turn or going down in housing prices. It is estimated that the total amount of real estate loan loss provisions for all domestic banks will increase NT$ 7,900,000,000 accordingly. 

As the banks will need to increase contributions, the capital that the banks can use will decrease and the banks’ costs will increase. Therefore, the banks may increase their housing loan interest rate by at most 0.5%. 

The FSC further stated that the Increase in Contribution Rate does not apply to policy-oriented housing loans, but will apply to housing loans, house-repair loans, and construction loans. Up to the end of September 2014, the total amount of housing loans, louse-repair loans, and construction loans was NT$ 7,650,000,000,000. 

The domestic banks are being required to make sufficient contributions within three years from 2015 (that is, by the end of 2017). The FSC will not regulate the contribution amounts of each of these years. However, as policy-oriented housing loans are exempted from the Increase in Contribution Rate, and because the state-owned banks undertake policy-oriented housing loans such as housing loans for young people more than private banks, private banks are complaining that they will be under more pressure due to the Increase in Contribution Rate.  

- The burden of proof when asserting the exclusion of a causation link and for no fault for the damages to customer due to a violation of certain provisions under the Act shall be borne by the food businesses.