Government officials yesterday defended the legitimacy of the second-stage financial reform as being necessary to sharpen competitiveness in a television debate with opposition lawmakers. The legislators accused the government of sloppy policy-making that violated the free-market mechanism.
Vice Premier Wu Rong-i (吳榮義), who was commissioned to oversee the reform, led Council for Economic Planning and Development Chairman Hu Sheng-cheng (胡勝正) and Minister of Finance Lin Chuan (林全) in answering questions from Chinese Nationalist Party (KMT) legislators Lee Chi-chu (李紀珠), Lai Shyh-bao (賴士葆) and Fei Hung-tai (費鴻泰).
"The reform is not just about the four goals but about developing Taiwan into a regional financial hub," Wu said.
PHOTO: CHIEN JUNG-FONG, TAIPEI TIMES
The government's push to consolidate the financial sector is intended to help local banks expand abroad and be competitive with foreign giants such as Citibank, which has nearly US$1 trillion worth of assets, he added.
President Chen Shui-bian (
The government also hopes to create at least three large financial holding companies, each with a market share exceeding 10 percent, and a minimum of one financial holding firm run by foreigners or listed on an overseas bourse.
The KMT lawmakers questioned the policy.
"We do not oppose financial reform. What we oppose is sloppy decision-making and the unreasonable [target] numbers and timeframe given," Lee said.
The reform infringed on the market and it was questionable whether the government's efforts to shape the sector would really meet Taiwan's needs, she said.
"Big is not necessarily good," Lee said, adding that South Korea's largest lender, Kookmin Bank, had seven times the assets of Taiwan's Taishin Financial Holding Co (
In response, Hu said that the government's target of seven financial holdings firms was based on academics' calculations combined with the views of foreign investors, such as UBS, which suggested that only five financial holdings firms could survive in Taiwan, and Merrill Lynch, which said put the number at four.
To achieve the policy goal, the government disposed of the poorly performing Bank of Overseas Chinese (
The efforts encountered a setback, however, as a planned share-sale of state-run Taiwan Business Bank (台灣企銀) failed last month after the bank's union went on a four-day strike. The action was said to have scared away interested buyer E.Sun Financial Holdings Co (玉山金控).
The failure does not seem to have dented the government's resolve, however, as Chen vowed in his Double Ten Day speech to complete the reform as scheduled.
The minister said that synergies, rather than the mergers themselves, were the ultimate goal of the policy. He guaranteed transparency, legal compliance and open competition, while considering the rights and interests of banks, shareholders and employees.
Lee questioned the need for bigger financial institutions.
If the government wanted to foster the growth of financial institutions while at the same time barring them from going to China, this could give large banks a monopoly in the local market, harming the interests of consumers and small and medium enterprises, Lee said.
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