Senior representatives of Taiwan's 14 financial-holding companies discussed bank mergers in the legislature for the first time yesterday, although it is only government officials who are obliged to answer questions from lawmakers.
Aimed at clarifying the government's banking reform plans, the legislature's Finance Committee invited Financial Supervisory Commission (FSC) officials and business representatives to discuss the legitimacy and feasibility of the reform goals.
President Chen Shui-bian's (陳水扁) administration plans to cut the number of financial-holding companies from 14 to seven by the end of next year as a part of its effort to boost local banks' competitiveness.
However, when the company representatives were asked by lawmakers whether their companies were willing to be merged, no one raised their hand.
When asked which companies plan to take over a rival, 11 officials held up their hands.
The exceptions were officials from smaller players Fuhwa Financial Holding Co (復華金控), Waterland Financial Holding Co (國票金控) and China Development Financial Holding Corp (中華開發金控).
"If a company improves its operational efficiency, in theory, it would not be merged," Lee Chang-ken (
Cathay Financial is the nation's largest financial services provider by asset size.
Representatives of Fubon Financial Holding Co (
Even state-controlled financial services providers, including First Financial Holding Co (
FSC Chairman Kong Jaw-sheng (龔照勝) emphasized that the government will allow market mechanisms to decide which players should be eliminated, but lawmakers still expressed doubts.
Taiwan Solidarity Union (TSU) Legislator Lo Chih-ming (羅志明) demanded the commission keep a close eye on state-run financial-holding companies' corporate governance, even as it pushes for banking reforms.
Lo said Lin Tzong-yeong (林宗勇), chairman of the International Commercial Bank of China (ICBC, 中國國際商銀), has failed to avoid conflict of interests and is suspected of hollowing out Mega Financial Holding Co (兆豐金控), the parent company of ICBC.
According to Lo, ICBC approved loans of NT$42 million (US$1.26 million) without collateral to the controversial Huapan Co (華磐公司), which was established with an initial capital of NT$5 million and in charge of obtaining Thai workers for the Kaohsiung Rapid Transit Corp (KRTC, 高雄捷運).
In addition, Lin, as a supervisor of United Microelectronics Corp (UMC,
"This involves a high degree of moral risk," Lo said, as he called on the commission to investigate his allegations.
Kung said the FTC would launch an immediate investigation.
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