Former Sino-Pac Financial Holding Co (永豐金控) chairman Sean Chen (陳冲) took over the helm of the Financial Supervisory Commission (FSC) yesterday, pledging to strengthen risk management of the nation’s banking sector and help domestic firms weather the global financial storm.
The veteran financial official also promised to conduct a thorough review of major policies under his jurisdiction and to revamp them if necessary.
“No one had experience coping with financial turmoil of this type and magnitude before,” Chen said after the swearing-in ceremony. “No country is spared and no country can emerge from it single-handedly.”
Chen, the sixth FSC head since the creation of the financial regulatory agency four-and-a-half years ago, said he would approach his new duties with humility and join forces with other government agencies in making domestic lenders better equipped in risk management and more willing to deal with customer problems.
The Cabinet has reiterated its support for the financial sector in the hope it would extend the courtesy to corporate borrowers, who in turn are urged to avoid sacking employees amid the economic downturn.
“Governments around the world are rallying behind their ailing financial institutions, aware of the importance of the sector’s health to economic growth,” Chen said, adding he would follow the international trend.
To that end, the new FSC chief said he was in favor of mergers and creating a mechanism similar to the financial restructuring fund to prevent systematic failure and address overlending.
Chen said the FSC had made little headway in facilitating mergers and could be more influential in creating a bailout mechanism.
“We must have fire extinguishers on hand in case of emergency,” Chen said of the potential measure.
Chen also voiced reservations about the new accounting regulation to be implemented next year that requires companies to list falling product prices as profit losses rather than as inventory costs.
The practice could prompt banks to lower credit ratings for companies with sizable inventories, adding to their credit strain, the new top financial regulator said.
“It is not fair for banks to tighten credit for customers months after granting loans simply because of a new accounting practice when their financial conditions remain the same,” Chen said.
Chen said he intended to conduct a review of the regulation and order a one-year moratorium if necessary.
Chen also dismissed criticism about short-selling in the local bourse, saying it should not be banned.