Taipei Times (TT): What will be at the top of your priority list after you assume the chairmanship of Taiwan Financial Holding Co (台灣金控)?
Liu Teng-cheng (劉燈城): First, I will try to gain a better understanding of the company and its operation. I have some ideas about its future development, but will keep them to myself for the time being.
TT: Is Taiwan’s banking sector in need of consolidation? What can be done to facilitate the process if it is necessary?
Liu: Consolidation is the right thing to do to address the nation’s overcrowded and fragmented banking market. There are so many banks and branches that there are no leading banks in Taiwan.
In some European countries and places such as South Korea, one or two top banks command 20 percent or 30 percent of market shares in their countries.
Since consolidation is necessary, the question is how to implement it. Hostile or compulsory acquisitions and mergers are not easy or helpful as can be evidenced by past examples.
The government can facilitate consolidation through provision of incentives. Authorities should think more seriously about the issue. The government is aware of the need of consolidation and has encouraged it. Surely, it can try harder to bring it about by providing more incentives.
While I worked for the Ministry of Finance, there was a consensus to move in the direction of consolidation that was supported by academics and experts.
It is up to incumbent policymakers to choose their priorities.
TT: What were your biggest achievements during your time as chairman of Taiwan Cooperative Financial Holding Co (合作金控)?
Liu: Under my stewardship, the 65-year-old Taiwan Cooperative Bank (合作金庫銀行) developed into the nation’s 16th financial holding company that is the fourth-largest by assets.
The company teamed up with French banking group BNP Paribas to set up a life insurance firm, BNP Paribas Assurance TCB Life Insurance Co (合作金庫人壽) in 2010 and an investment trust firm, BNP Paribas TCB Asset Management Co (合庫巴黎證券投資信託), the next year.
The French group has considerable prowess in product design and investment strategy, while Taiwan Cooperative Bank has the largest number of branches in Taiwan. The joint ventures aim to pool our resources and take advantage of each other’s strengths. Sure, differences arise during decisionmaking, but they do not jeopardize cooperation as long as the two sides stay united to advance the interests of the joint ventures.
TT: What can local lenders do to boost profitability amid the low interest rate environment?
Liu: Low interest rates constrain earnings, but the thin profit margin is also caused by intense competition, which itself is attributable to overbanking. That is why domestic lenders are seeking to expand overseas, especially in China, to augment their living space. Expansion is necessary for their sustained existence.
Bank of Taiwan (台灣銀行), for example, has signed several cooperation pacts with counterparts in China. Financial firms have pressed for faster regulatory easing, while the government prefers a progressive and stable approach.
Tighter risk control is not unreasonable given the fact that China is not like other Western countries in terms of legal protection. The special ties between Taiwan and China also warrant caution. Having worked for the government for a long time, I understand that policymakers cannot ignore political and other implications when weighing financial regulations.
TT: Will aggressive expansion overseas not pose further challenges to domestic lenders’ capital adequacy, which already lags behind peers in Asia?
Liu: Taiwan is not behind in terms of risk control. The Financial Supervisory Commission has tried to bring the local sector on par with international peers in this regard. The commission will formally raise the loan loss reserve to 1 percent next year, from the current 0.5 percent.
Currently, lenders meet the requirement [of 1 percent] because of the commission’s persuasion. The tightened reserve threshold and other restrictions will make Taiwanese lenders more in line with foreign banks in terms of capital adequacy.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
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