Taiwanese banks exposed to domestic property and China risks, says Fitch

Fitch Ratings believes the cost of funding for Taiwanese banks could jump nearly 200 basis points should Taiwan or China property prices fall sharply. The country's banks are also prone to any slowdown in global economic growth.

The credit outlook for Taiwanese banks in 2011 is stable, but should domestic property prices fall or there is a sharp economic slowdown in China they would be exposed, Fitch Ratings believes.

The rating agency cautions that potential negative drivers could result in a sharp increase in credit costs - by more than 100-200 basis points depending on individual banks' risk profiles - in the event of stress-test scenarios developed by the agency. Stress events include a downturn in highly cyclical