Tue, Jan 11, 2005 - Page 10 News List

Bank managers under fire

STATE-RUN INSTITUTIONS Pan-blue legislators asked why staff at state-owned banks were getting generous bonuses when bank performance was not up to scratch

By Joyce Huang  /  STAFF REPORTER

Lawmakers yesterday asked Minister of Finance Lin Chuan (林全) to overhaul the performance evaluations of government-appointed management in the banking sector.

Chinese Nationalist Party (KMT) legislators Luo Shih-hsiung (羅世雄) and Yang Chiung-ying (楊瓊瓔) said that the ministry had done nothing to remove poorly performing top managers from several state-run banks.

In response, Lin said the ministry had for some time used a criteria in the annual performance evaluations of state-appointed management as a reference for management reshuffles.

But he acknowledged that, in the past two years, most managers in question had been awarded an "A" grade despite their banks' disappointing performance.

"Work performance is just one of [our] considerations for possible reshuffles of top management at state-run banks," Lin told the legislature's finance committee during a question-and-answer session yesterday morning.

Yang said the ministry had used top management positions as "political kickbacks to reward President Chen Shui-bian's (陳水扁) cronies."

According to the finance ministry, two of the nine banks in which the ministry has a stake greater than 20 percent, had aggressively written off bad loans and performed worse last year compared with the year before.

The two banks are Taiwan Cooperative Bank (合作金庫), which reported NT$1.5 billion in pre-tax revenue in November, and Taiwan Business Bank (台灣中小企銀), which reported NT$7 billion in pre-tax losses.

The Taiwan Cooperative Bank posted NT$3.19 billion and NT$1.57 billion in pre-tax revenue respectively in 2003 and 2002.

Sean Chen (陳沖), chairman of Taiwan Cooperative, yesterday told the committee that the bank's NT$1.6 billion drop in pre-tax revenue last year was largely the result of feeding a NT$2.9 billion cash reserve, part of which will be used to compensate employees during privatization.

"Taiwan Cooperative actually performed very well if the NT$3 billion reserve is included in revenue," Chen said.

The remaining seven state-run banks that reported satisfactory revenues last year include First Commercial Bank (一銀), the Bank of Taiwan (台銀) and the Land Bank of Taiwan (土銀).

In particular, Lin lauded First Commercial Bank, which began to turn a profit last year, reporting NT$12 billion in pre-tax revenue compared to pre-tax losses of NT$18.8 billion and NT$32.5 billion in the last two years.

As a result of satisfactory performance, Lin said some employees may receive year-end bonuses equivalent to 4.6 months salary.

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