Financial heavyweights yesterday pressed the government to facilitate consolidation of the nation’s financial holding companies to achieve economies of scale and competitiveness.
The Chinese National Association of Industry and Commerce (CNAIC, 工商協進會) renewed the calls in a forum devoted to discussion of the challenges facing the financial sector.
“There are 16 financial holding companies in Taiwan when five to seven would suffice to meet the demand for financial services,” CNAIC chairman Kenneth Lo (駱錦明) said.
Lo said the government should reactivate financial reform, which has been a taboo issue for years after previous efforts under the former Democratic Progressive Party administration drew strong suspicion of tradeoffs and other irregularities.
The financial sector accounted for 6.68 percent of Taiwan’s GDP last year, declining from 8.67 percent in 2009, CNAIC said, attributing the decline to a deteriorated operating environment.
Taiwan tops the world in terms of banking density as measured by the number of banks against population and geographic area.
The fragmented and overcrowded market drives lenders to cut prices to win customers, a strategy that is constraining profits.
Bold steps are necessary to put an end to the vicious cycle, Lo said, as Taiwan has had the lowest borrowing costs in Asia for years.
Both the Financial Supervisory Commission and the Ministry of Finance have voiced their support for integration, but have not taken concrete steps to achieve it, he said.
State-run First Financial Holding Co (第一金控), Mega Financial Holding Co (兆豐金控), Hua Nan Financial Holding Co (華南金控) and Taiwan Cooperative Financial Holding Co (合庫金控) have all said that they are receptive to consolidation, but will not make moves in the absence of clear government instructions.