TAIPEI, June 17 (Reuters) - Taiwan’s financial regulator has fined nine banks for improper sales of foreign currency derivatives, it said on Tuesday, having already punished at least one for failing to disclose risks associated with such products.
The banks to be fined rank among Taiwan’s largest financial institutions and include Cathay United Bank, a unit of Cathay Financial Holding Co Ltd, and CTBC Bank, a unit of CTBC Financial Holding Co Ltd.
Taiwan’s Financial Supervisory Commission (FSC) will levy a fine of between T$2 million ($66,700) and T$4 million per bank, the FSC said in a statement.
The watchdog said the banks had not established proper risk-management mechanisms or evaluated the risk potential of the products they were selling.
The products, called target-redemption forwards, offer buyers leveraged bets on foreign-currency gains and offer regular income as long as the target currency does not weaken sharply.
Many believe the banks’ yuan-derivative sales are the main reason behind the punishment, since the move comes as client complaints mount about losses following a recent sharp fall in the Chinese currency.
The FSC’s statement did not specifically mention the yuan. It had previously punished Bank SinoPac, a unit of SinoPac Financial Holdings Co Ltd, for improper sales of foreign currency derivatives.
The regulator later said three more banks would also be punished, but declined to say which ones.
It was not immediately clear if those three banks were among the nine included in Tuesday’s announcement. ($1 = 29.9750 Taiwan New Dollars) (Reporting by Roger Tung; Writing by Michael Gold; Editing by David Holmes)