General Guidance for Developing Differential Premium Systems

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October 31, 2011 (4) Risk Groups Nine risk groups are distinguished according to a three-by-three matrix, in which the Y-axis represents the CAR and the X-axis represents the CSEDRS. (5) Deposit insurance premium rates i. For covered deposits, the applicable premium rates are categorized into five grades as A, B, C, D, and E: • For domestic banks and foreign bank branches in Taiwan, the premium rates of Grade A, B, C, D, E are 0.05%, 0.06%, 0.08%, 0.11% and 0.15%. • For credit cooperatives, the premium rates of Grade A, B, C, D, E are 0.04%, 0.05%, 0.07%, 0.10% and 0.14%. • For credit departments of farmers' and fishermen's associations, the premium rates of Grade A, B, C, D, E are 0.02%,0.03%,0.04%,0.05% and 0.06%. ii. The flat premium rate of 0.005% is applied to domestic banks, foreign bank branches in Taiwan and credit cooperative whose insured deposits exceed the coverage limit. The flat premium rate of 0.0025% is applied to credit departments of farmers' and fishermen's associations whose insured deposits exceed the coverage limit. iii. Premium rates for each type of financial institution are detailed in the following charts. (6) Standard Dates for Calculation of Risk Indicators i. The standard dates for calculating CAR are March 31 and September 30, which are determined as one quarter before the standard dates for calculating deposit insurance premiums (June 30 and December 31), based on the most recent report submitted by the insured institution to the competent authority. For foreign bank branches in Taiwan, data reported to the competent authority in their home countries shall serve as the basis. ii. The standard dates used by the CSEDRS are May 31 and November 30, respectively, which are determined as the end of the month before the standard dates for calculating deposit insurance premiums (June 30 and December 31). Under this system, the most recent financial examination report of the insured institutions on such standard dates shall be used to calculate CSEDRS ratings. (7) Exceptions: i. Calculation of the differential premiums for insured institutions in the process of a merger/consolidation: • For the payment period at the time of merger/consolidation: The calculation of premium rates will be based on the risk indicators of each institution before a merger/consolidation. • For the payment period after a merger/consolidation: 65
October 31, 2011 (a) If there is no new examination data, the premium rate is based on the CSEDRS of the existing institution. The premium rate of the newly-established institution is based on the highest CSEDRS of the original institutions before a merger/consolidation. (b) If there is no CAR data, the premium rate is based on the CAR of the existing institution. The premium rate of the newlyestablished institution is based on the CAR of the institution whose CSEDRS are the highest among the original institutions before consolidation. ii. The differential premium rates for insured institutions that do not have examination data or CAR data available due to reorganization will be based on the latest CSEDRS before the reorganization. iii. Insured institutions that are newly established and do not yet have examination data shall pay the Grade C differential premium rate. However, the Grade D differential premium rate must be applied to credit departments of farmers' and fishermen's associations established under special permission by the central competent authority for agricultural finance in accordance with the proviso of subparagraph 2 of the "Auditing Standards for Applications to Reestablish Credit Departments by Farmers' and Fishermen's Associations whose Credit Departments are Assumed by a Bank." iv. The premium rate for government-owned insured institutions, excluding those institutions subject to the lowest differential rate, should be calculated as one rate level lower than the rate for their risk group. v. The premium rate for insured institutions that accept deposits but do not make loans other than time deposit pledge, and the rate for deposits required by law to be deposited in certain financial institutions, will be determined by the competent authority. vi. Insured institutions shall pay the highest premium rate if they are under guidance, superintendence or conservatorship by officers dispatched by the competent authority or the central competent authority of the agricultural finance in accordance with the law. vii.Bridge banks that are set up in accordance with the Deposit Insurance Act do not need to pay the insurance premium. viii.If an insured institution receives a warning notice of termination of the deposit insurance agreement by CDIC in accordance with the Article 25 of the Deposit Insurance Act, CDIC can legally raise the premium rate of the institution by 0.01% to 0.05%. (8) Regulations on Appealing a Premium Rate i. The insured institutions that object to their differential premium rates are still required to pay the insurance premiums on time. A written request for review of the premium rates should be submitted to CDIC 66
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General Guidance for Developing Dif
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October 31, 2011 I. Executive Summa
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October 31, 2011 Transparency, dis
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General Guidance for Developing Differential Premium Systems

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