TAIPEI, April 28 Taiwan's market regulator said
on Monday a local bank will be barred from issuing new
foreign-exchange derivatives products for one year for failing
to disclose the risks associated with such complex investments.
The Financial Supervisory Commission, in a statement, said
the ban is being imposed on Bank SinoPac, a unit of SinoPac
Financial Holdings Co Ltd.
The move comes amid losses investors have suffered after a
recent decline of the Chinese yuan. Bank SinoPac had not
properly hedged against foreign currency falls or warned clients
of the potential for depreciation, according to the statement.
"The bank did not sufficiently assess the ability of clients
to withstand risks associated with their investments," the
Officials at SinoPac Financial were not immediately
available for comment.
Earlier this month, FSC chairman William Tseng said a local
bank would be punished for aggressively promoting complex
derivatives, but he didn't name the institution. In March, the
commission flagged potential risks associated with a more
Though the FSC statement did not mention any foreign
currency, one official who insisted on anonymity said the
punishment stems from Bank SinoPac's sales of yuan investment
Taiwan's banking ties with China have expanded in the last
few years, with both sides signing a yuan-clearing agreement and
allowing local banks to take yuan deposits starting in February.
Yuan deposits in Taiwan surged to 268.4 billion yuan ($43.16
billion) at of the end of March, according to the latest figures
from the central bank.
(Reporting by Michael Gold and Emily Chan; Editing by Richard