FSC attacked over license changes

The Financial Supervisory Commission (FSC) came under attack yesterday over its decision to tighten the licensing requirements for new financial holding companies. Financial experts said the commission had broken an agreed-upon policy opening up the sector.

"This is an utterly backward move against the conclusions reached at last week's preparatory meeting for economic sustainable development conference," said Paul Chiu (邱正雄), chairman of EnTie Bank (安泰銀行) and a former minister of finance, at a financial group meeting yesterday.

On Monday the commission had announced that under its new proposals, each financial institution would be required to have at least NT$50 billion (US$1.55 billion) in capitalization and up to NT$700 billion in assets if it wanted to apply to establish a financial holding company.

That criteria could screen out a number of interested financial institutions, such as EnTie, the Taiwan Cooperative Bank (合作金庫銀行), and Industrial Bank of Taiwan (台灣工銀). At present, only the state-run Bank of Taiwan (台灣銀行) would qualify.

People First Party Legislator Christina Liu (劉憶如), who convened the meeting, said the regulator had to break the myth of "bigger is better."

She said that only 9 percent of the 621 financial holding firms in the US have assets totaling more than NT$330 billion, compared with 12 out of 14 financial groups in Taiwan, or more than 80 percent.

Both Chiu and Liu demanded that the commission clarify its position.

Acting FSC Chairman Lu Daung-yen (呂東英) said in the meeting that the commission would not make a unilateral decision on the proposal before the economic forum scheduled for July 27 and 28 could weigh in on the issue.

The proposed minimums had not been confirmed yet, Lu said.