Financial analysts appeared unimpressed with President Chen Shui-bian's (
"The second-stage financial reform is intrinsically a failure," Chu Yu-chun (
The government did not significantly reduce the number of state lenders last year or carry out a plan to halve the number of local financial holdings firms by the end of last year, Chu said.
Chen said in a speech at a forum yesterday that, despite the need for review and better implementation, the second financial reform was correct in its aims.
Financial stocks soared yesterday, with the financial sub-index outpacing all other indices with a rise of 1.46 percent, beating the 0.4 percent increase in the benchmark index.
Gainers were mainly insurance players, led by Shin Kong Financial Holding Co (
The brisk performance was not driven by Chen's comments, but rather by the property market, said Fiona Uang (汪姵吟), an analyst with the Mega Securities Co (兆豐證券).
Reports said yesterday asset-rich Shin Kong Financial planned to issue a real estate investment trust, backed by its plan for residential buildings with apartments for lease, she said.
In October 2004, Chen began promoting second-stage financial reforms aimed at consolidating the nation's overcrowded banking sector. The scheme was aborted during the term of former premier Su Cheng-chang (
The reform had four goals: halving the number of state banks to six by the end of last year; reducing the number of financial groups to seven by the end of this year; having at least one local bank taken over by a foreign competitor; and having at least three local lenders with a market share exceeding 10 percent.
Only two targets have been met; Standard Chartered Bank has acquired Hsinchu International Bank (
"We do not expect Chen's remarks to trigger industry-wide consolidation. But this may imply the government's further move to dispose holdings in state-controlled lenders," Uang said.
"For private financial institutions, their priority is to expand in China, not to become bigger in the small domestic market," she said.
Market watchers named several state banks as potential targets for future share disposal, including Chang Hwa Bank (
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