The relaxation, however, gave rise to a number of disputes, including China Development Financial Holding Corp's (中華開發金控) drawn-out hostile takeover bid for Taiwan International Securities Corp (金鼎證券), and Chinatrust Financial Holding Co's (中信金控) controversial investment in larger rival Mega Financial Holding Co (兆豐金控).
"We think the commission did not backtrack from its belief in promoting consolidation. The technical tightening will not affect our ratings on Taiwan's banking sector for the moment," said Jonathan Lee (
The regulator is fully aware of and continues to support consolidation as the solution to the country's fragmented and overly competitive banking sector, Lee said, citing his meeting with a commission member last week.
Lee acknowledged that the tightening would to some extent affect the pace of consolidation.
The scale of the impact would depend on how tight the commission is in implementing the new rules, he added.
Fitch published a report on Taiwan's banking system last week, saying that local banks were operating in a tough environment given a severely fragmented market and called for the privatization of state-run banks and promotion of free market mechanisms to facilitate consolidation.
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