In his first legislative question-and-answer session, newly appointed Financial Supervisory Commission (FSC) chairman Chen Yuh-chang (陳裕璋) yesterday vowed to work closely with the central bank to “divert the NT$6 trillion [US$186.9 billion] of capital parked in private sector time deposit accounts into the nation’s infrastructure projects ... This will benefit both the local banking sector and the nation’s economic development,” he said, throwing his support behind President Ma Ying-jeou’s (馬英九) pledge earlier in the day to launch a new golden decade for Taiwan.
Chen told reporters on the sidelines of the meeting that his commission would work with the Council for Economic Planning and Development to hammer out concrete measures and incentives in the near future.
The objective will be to encourage domestic lenders to fund the domestic tertiary sector or the operation of energy-saving solution providers, even where these businesses may experience difficulties pledging solid collateral.
When asked how the commission planned to ensure the repayment of such loans, Chen said that the government might turn the Small and Medium Enterprise Credit Guarantee Fund (中小企業信保基金) to help lenders minimize credit risk.
“Instead of [the possible harm from] a record-low interest rate, the biggest threat today is that much of the nation’s idle capital has found no way out,” he said.
Chinese Nationalist Party (KMT) Legislator Lo Shu-lei (羅淑蕾) said Chen should tighten the commission’s regulations on the acquisition of local assets by high-leveraged international private equity (PE) funds.
He used as an example Peter Kwok’s (郭炎) planned acquisition of a 9.9 percent stake in Chinatrust Financial Holding Co (中信金控) for NT$21 billion, NT$12 billion of which is reportedly to be funded by local lenders.
Kwok was formerly a member of the Chinese People’s Political Consultative Conference in Beijing.
“The regulator should tighten up the banking sector’s loan to value ratio for PE funds, since many of them leverage local capital on the lookout for quick gains,” Lo said.
Chen said that domestic banks were not allowed to exceed a 60 percent loan-to-value ratio in loans to PE funds, citing a resolution endorsed by the Bankers’ Association of ROC.
KMT Legislator Lai Shyh-bao (賴士葆) urged state-run financial institutions, including Taiwan Stock Exchange Corp, to refrain from wasting taxpayers’ money in an effort to kiss up to Chen.
Several of the institutions paid for a half-page newspaper ad that has run for several days in the Chinese-language press welcoming the appointment of a new commission chairman.
“I also find that inappropriate,” Chen said during yesterday’s session.
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