A plan to create the nation's biggest financial service provider by merging three state-owned banks suffered a setback yesterday when legislators rejected the deal.
The objection to a merger of the Bank of Taiwan (台灣銀行), Land Bank of Taiwan (土地銀行) and the Export-Import Bank of ROC (中國輸出入銀行) was a blow to the government's renewed reform effort.
The legislators' decision came at a Finance Committee meeting yesterday morning, after opposition lawmakers questioned the wisdom of merging the Export-Import Bank with the other two.
Chinese Nationalist Party (KMT) legislators Lee Chi-chu (李紀珠), Alex Fai (費鴻泰) and Lo Ming-tsai (羅明才) said they were concerned that the Export-Import Bank would lose its key role as a supporter of the nation's economic development policies and of local firms expanding overseas.
They said they were also worried about the bank's employees.
The Export-Import Bank was established in 1979 to facilitate exports and imports by offering export credit insurance, relending and other various kinds of financing facilities, its Web site says.
"The government is going against global trends by belittling the role of the Export-Import Bank, compared with the efforts of the Japanese and the US governments to strengthen their import and export banks," Lee said in a telephone interview yesterday.
She said Minister of Finance Ho Chih-chin (
Ho told the committee that the three banks were selected because they are government-owned. He said combining the Export-Import Bank with the two commercial lenders did match global trends, and he cited Japan as an example.
But Lee disagreed.
"There will be limited synergy in terms of the outlet network," she said.
The Cabinet said this summer that it planned to merge the three banks through a share swap to create a financial holding company that would replace Cathay Financial Holding Co (國泰金控) as the nation's biggest in terms of assets.
The new entity would be named Taiwan Financial Holding Co (台灣金控) and have combined assets of NT$158.8 billion, which would place it among the world's top 100 banks.
The new entity would rank No.89, Premier Chang Chun-hsiung (
"Big does not mean beautiful," Lee said yesterday. "I do not see how the merger will boost the financial sector."
The Ministry of Finance, however, defended the policy last night in a statement on its Web site.
It said the merger would help facilitate government policy and enhance administrative efficiency.
It would also solve personnel, salary and budget problems that are commonly associated with state banks, the ministry said.
The legislature yesterday also halted the ministry's plan to sell a 22.5 percent share of Chang Hwa Commercial Bank (
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