March 14, 2005
Minister of Finance Lin Chuan, commenting on President Chen Shui-bian's call for the number of state-held banks to be halved within one year, said in late February that he hopes the current twelve banks in which the government holds stock can be reduced to just six within the next year or so. Lin said the government's release of its bank shares would help stimulate mergers and acquisitions in Taiwan's overcrowded banking sector, raising the industry's competitiveness by creating bigger banks.
Lin called on banks in Taiwan to work on developing regionally and globally, to diversify their services, and to beef up their operations through capital increases or mergers so as to become more competitive. Lin cited the strong influence of the large stock holding families that run some banks as an obstacle to the initiation of bank mergers in Taiwan.
The minister also said the government would do its best to relax banking regulations and put them on track with international standards, and would establish market exit mechanisms for troubled financial institutions so as to facilitate mergers and acquisitions within the industry.
Speaking on Chang Hwa Commercial Bank's plan to issue global depositary receipts in the coming future, Lin said the government is willing to sell its entire stake in the bank if it can get a price at no lower than market value. This stock release would allow overseas investors to purchase up to 40% of the bank's stock. Lin said having foreign investors in control of such a large stake in this big bank would have a major impact on Taiwan's banking industry by speeding up the pace of mergers and acquisitions, raising the level of competition and introducing new management concepts.
Chang Hwa Commercial Bank is one of the "Big Three" private commercial banks in Taiwan and was ranked 216th in capital and 217th in total assets in "The Banker" magazine in 2003.
Lin said that although the MOF even plans to put Bank of Taiwan up for privatization, it would ensure that the government remains the bank's largest shareholder. Bank of Taiwan is Taiwan's leading bank and was ranked 105th in the world by "The Banker" in 2002.
Lin made his comments while speaking on the opening day of a class being presented by Citigroup in cooperation with the Department of Finance at National Taiwan University. Citigroup is participating in a program in which foreign executives in Taiwan are invited to present classes at universities around Taiwan.
(United Daily News)
E-mail this page.
Invest in Taiwan
