Financial Supervisory Commission (FSC) Chairman Sean Chen (陳冲) said yesterday that the commission would formulate a reward mechanism today, enabling local banks whose lending amount grows by 0.5 percent per month to enjoy a lower deposit insurance premium rate.
Chen made the remark at the legislature’s Finance Committee, saying the government was mulling plans to spur bank loans to local businesses hit by the global credit crisis.
His comment also came in the wake of criticism by Democratic Progressive Party (DPP) Legislator Gao Jyh-peng (高志鵬) that the government’s promises were merely slogans because access to capital remained increasingly difficult for many firms.
“If this problem persists, many businesses will be forced to close down,” the Chinese-language United Evening News quoted Gao as saying yesterday.
Chinese Nationalist Party (KMT) Legislator Sun Ta-chien (孫大千), however, said private banks needed to take into account their shareholders’ interests first.
If the government does not provide enough support to banks, “moral suasion” alone will not encourage banks to extend loans to local businesses, the newspaper cited Sun as saying.
Sun also suggested that the FSC should consider coordinating with the Ministry of Finance to compensate banks for risks arising from increasing loans to businesses should any losses occur.
KMT Legislator Lin Te-fu (林德福) said many banks would refrain from increasing lending to make their year-end financial reports look better, adding that the commission should come up with more concrete policies.
“If banks want to make their financial reports look better, they should increase lending so that their non-performing loan ratio will [drop and] look more attractive,” Chen said.
He added that while a lending freeze persisted in October, local banks began easing credit last month.
Lawmakers yesterday also lambasted the government’s effort to aid local companies when many of their chief executives still enjoy high salaries.
In response, Chen said these highly paid executives should cut their salaries first before approaching the government for assistance, although the government cannot force them to do so.
FSC Vice Chairman Wu Tang-chieh (吳當傑) said yesterday the commission would revise regulations to enhance information disclosure transparency for listed companies.
Listed companied that have posted losses for two consecutive years will be required to reveal remuneration paid to their executive directors, Wu said, adding that high-level officials should be accountable to their shareholders.
ADDITIONAL REPORTING BY SHIH HSIU-CHUAN
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