Taiwan - Banks expect downturn on high-tech sector constraints

Taipei, Nov. 6 (CNA) Despite brisk business in liquidity services this past year, Taiwanese banks are expecting sluggishness, knowing that a cold winter is around the corner due to the global economic downturn.

Banks, particularly state-owned banks, are preparing for a slow business period from the fourth quarter through to next year in the face of a sluggish global economy that has hurt demand for many of the gadgets produced by Taiwan's high-tech suppliers.

Key players in Taiwan's hi-tech sector, such as Taiwan Semiconductor Manufacturing Co., and AU Optronics (AUO), have announced cuts in their capital investment due to reduction in capacity as a result of a decline in orders.

Whether from the perspective of Taiwan's economic prospects or capital investment, loans and credit services to high-tech companies are likely to shrink next year, according to a local banker.

It would be impossible for banks to maintain double-digit growth in 2012 as they did in the first eight months of 2011, he predicted.

Banks will consequently not only become stricter about granting loans, but they are flashing constraints signals to warn their staff about a looming sluggish period, he said.

Against this backdrop, some banks have turned their attention to the non-high-tech sectors, such as the restaurant and tourism sector, medical services and biotechnology sector, in a bid to boost their loan services, according to the banker.

Some Taiwanese companies have been relocating their investments from mainland China back to Taiwan due to various factors, including difficulties acquiring loans there.

Some big conglomerates whose pockets are deep enough may also consider mergers or buy-out plans, taking advantage of the rare opportunity brought about by investment cuts by manufacturers and larger amounts of loan funds at banks, according to another source.

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