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Finance ministry worried about pace of privatization

The Ministry of Finance expressed concern about whether the government's goal of reforming the finance sector could be completed by the end of this year as scheduled, after the legislature yesterday imposed stricter terms on the privatization of the Central Trust of China (中央信託局).

The Finance Commission of the Legislative Yuan yesterday demanded that the ministry sign an agreement with the employees of Central Trust that would protect workers' rights and regulate the sale of the 100 percent state-owned lender before it is put up for auction.

"We are worried that this may create uncertainty about reaching the goal of completing the second stage of financial reforms by the end of the year," Minister of Finance Lin Chuan (林全) said yesterday.

Lin said that he would report the sudden change to Vice Premier Wu Rong-I (吳榮義), who was assigned by President Chen Shui-bian (陳水扁) to oversee the privatization of state-controlled financial institutions.

Citigroup, the world's largest financial-service provider, was interested in buying the Central Trust's banking unit and had approached him on the matter, Lin said in a question-and-answer session of the Finance Committee yesterday.

The ministry planned to sell Central Trust's banking unit, with a net value of NT$5.8 billion, and the life-insurance unit, valued at NT$3.5 billion, in separate auctions to garner a combined NT$10 billion to NT$15 billion, Lin said.

Prior to selling Central Trust, the ministry has successfully privatized its stakes in two other state-run financial institutions by selling Taiwan Development & Trust Corp (台開信託) to Jih Sun Financial Holdings Co (日盛金控) in January and the Bank of Overseas Chinese (華僑銀行) to Polaris Financial Group (寶來集團) in March.

The nation has seen 14 financial-holding companies established since 2001.

But the government is now planning to reduce the number of financial-holding companies by half in two years and have each of the top three firms dominate at least 10 percent of the market.

The merger between the International Commercial Bank of China (中國商銀) and Chiao Tung Bank (交通銀行), which are both banking arms of Mega Financial Holding Co (兆豐金控), is underway and expected to be completed at the beginning of next year, according to the ministry.

However, the government's efforts to boost industrial consolidation appeared to suffer a setback after Chang Hwa Commercial Bank (彰化銀行) failed to finalize its global deposit receipt (GDR) offering earlier this month.
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