Banker may have quit due to government carping

Pressure from the bank of China to restrict currency predictions may have been the reason behind the resignation at the end of last month of Citibank NA's chief Taiwan economist Lawrence K. Duke, according to reports.

According to a Chinese-language newspaper report, Duke decided to step down after becoming frustrated at pressure from the central bank over research reports analyzing the exchange rate of the New Taiwan dollar against its US counterpart and other financial indicators.

Duke was unavailable when sought for comment.

Citibank spokeswoman Joyce Chen (陳昭如) confirmed to the Taipei Times about Duke's resignation at the end of last month. But she refused to comment on the reports of central bank pressure, saying such stories are speculation.

According to Chen, Duke, who joined Citibank in May 2000, had, over the previous few months, talked about resigning to pursue a teaching position in the US.

However, one senior foreign research economist who requested anonymity confirmed that the government keeps a close eye on reporting by investment houses, paying particular attention to the veracity of stated statistics.

The researcher said that government agencies often require researchers to explain their reporting methods and content.

While Citibank seeks a replacement for Duke, Taiwan research will be handled by Citibank's regional team based in Singapore, Chen said.

Duke's resignation and the reports on central bank pressure come a week after several bank officials blasted what they described as irresponsible reporting by investment banks on financial conditions in Taiwan.

Last Wednesday, Central Bank of China Governor Perng Fai-nan (彭淮南) refuted a report by Heather Montgomery, an Asian Development Bank Institute researcher, who predicted that Taiwan would soon face a financial storm due to poor business performance and the asset quality of local banks. Perng said that the report was inaccurate and that Taiwan wouldn't face such a crisis.

A day earlier, Chou A-ting (周阿定), director general of the bank's foreign exchange department, reprimanded major foreign investment banks and local research houses for irresponsible reporting on the movement of the New Taiwan dollar.

Chou said the investment houses and researchers don't explain the methodology of their predictions and often simply follow the upward or downward trend when making their forecasts. This causes a excessive reaction in the market and causes people unnecessary losses, he said.

But according to the senior foreign economist, major research houses base their estimates on sound, objective research.

"When doing research you have a duty to your clients and colleagues. So you're not going to base a prediction on a whim," said the researcher.

The researcher admitted that predictions are essentially an opinion based on objective judgement and could impact the market, but that the views are governed by ethical guidelines.

"These houses base their information gathering practices on the standards of professional conduct put forth by the Association for Investment Management and Research (AIMR)," he said.

AIMR is an international, nonprofit organization of more than 50,000 investment practitioners whose mission is to educate and examine investment managers and analysts and sustaining high standards of professional conduct.