Following government approval of six financial holding companies yesterday, massive layoffs may occur in the banking sector, a Chinese-language business magazine reported yesterday.
The report, citing a number of industry analysts, said that up to 10,000 workers in the financial sector could soon lose their jobs.
With over 100,000 workers involved in the market consolidation, the report cited executives from Hua Nan Bank (華南銀行) and Taishin International Bank (台新銀行) as saying that a 10 percent reduction in staff is possible.
Pundits, however, say the scale of layoffs will depend on the level of restructuring and consolidation within each financial holding company.
"Laying off staff should be anticipated during corporate restructuring. However, the main goal for financial holding companies is to engage in merger activities," said James Wong (
"It could take a financial holding company three to five years to eliminate redundancies. The first year may only result in a reduction of 1 percent or 2 percent of staff, mostly at the administrative level. The total reduction of staff after the first five years should be no less than 10 percent," he said.
"Some foreign financial holding companies managed to slash up to 18 percent of their workforce over a five-year period," Wong said.
Another analyst emphasized that increasing competitiveness is the primary concern.
"The establishment of financial holding companies by local financial service sector aims to increase competitiveness to cope with increased competition following Taiwan's entry into the WTO," said Yang Ya-hwei (
"If the financial services sector can fend off foreign competitors over the next several years, the pressure on the local financial industry to lay off staff will be reduced.
"Most financial holding companies are grouping companies from different industries [banking, insurance and securities], so the pressure to cut staff under such conditions is not so great," Yang said.
The banking industry has attempted to reduce staff since last year when the Ministry of Finance advised the sector to increase merger-and-acquisition activities. A number of local banks have quietly asked senior employees to accept early retirement packages, mostly on a voluntary basis.
"Once Taiwan's financial sector is internationalized, the pressure to fire employees will be reduced," Yang said.
But the restructuring process is not only limited to staff.
"Not every financial holding company will survive," said Norman Yin (殷乃平), a banking and finance professor at National Chengchi University (政治大學).
"Since some of the participants in these holding companies also have financial problems ... only two or three of them will be around for the long term," he said.
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