Three-bank merger to go ahead: Cabinet spokesman

The government will go ahead with its plan to merge three state-owned banks into a holding company despite a Legislative Yuan motion demanding a halt to the project, Cabinet spokesman Shieh Jhy-wey (謝志偉) said yesterday.

Shieh made the remarks a day after the legislature's Finance Committee passed a motion requiring the administration to suspend its plan to form Taiwan Financial Holding Co (台灣金控), which will combine the Bank of Taiwan (台灣銀行), the Land Bank of Taiwan (土地銀行) and the Export-Import Bank of the ROC (中國輸出入銀行) under one umbrella.

Shieh said that bank mergers fell under the jurisdiction of the executive branch, and the legislature could only offer advice or recommendations.

"While the Cabinet respects the legislature's power to make suggestions, it will go ahead with the plan to merge and transform the three state-owned banks into a financial holding company," Shieh said.

The motion to put the brakes on the plan was initiated by Chinese Nationalist Party (KMT) legislators Lee Chi-chu (李紀珠), Lo Ming-tsai (羅明才) and Alex Fai (費鴻泰), who claimed that the government had not taken the rights and interests of the banks' staff into account.

They added that the terms of the contract between the new holding company and staff of its subsidiary banks remained unclear and undecided and that the "demise" of the Export-Import Bank would lead to an abrupt halt to export financing for small and medium-size enterprises (SMEs).

In response, Shieh said that the lawmakers' concerns were unfounded.

"Since all three banks are 100 percent state-owned, their staff's rights and interests will be fully guaranteed after the banks are transformed into a fully government-controlled financial holding company," he said.

As to concerns about export financing for SMEs after the merger, Shieh said that trade financing and export insurance would be taken over by Bank of Taiwan divisions. Given the Bank of Taiwan's financial strength and experience in corporate banking and international financing, Shieh said that trade financing would be further expanded and become even more accessible to SMEs after the merger.

Premier Chang Chun-hsiung (張俊雄) has set Dec. 31 as a deadline for the Ministry of Finance to come up with a blueprint for the merger, which will be carried out in three phases.

The planned Taiwan Financial Holding, with US$158.8 billion in assets, will become the nation's top financial services provider. It will also be the 89th largest financial services company in the world and the 18th largest in Asia, ministry officials said.