Wed, Aug 21, 2013 - Page 13 News List

Taishin urges service sector boost

LAGGING:The financial sector is the backbone of modern service industries, accounting for 70.4 percent of GDP in the UK, but in Taiwan the equivalent figure is 25.8 percent

By Crystal Hsu  /  Staff reporter

Taishin Financial Holding Co (台新金控) yesterday urged the government to take steps to boost Taiwan’s service sector if it is serious about rebalancing the nation’s export-oriented economy.

The conglomerate said this would make the economy less vulnerable to external impacts, as service industries account for an important share of GDP in advanced economies.

Taishin Financial made the plea after President Ma Ying-jeou (馬英九) recently pledged to develop modern service industries in Taiwan, reviving the conglomerate’s hopes of resolving its longstanding dispute with the Ministry of Finance over the fate of Chang Hwa Commercial Bank (彰化銀行).

Taishin Financial has tried to merge its main subsidiary, Taishin International Bank (台新銀行), with Chang Hwa Bank, in which the group is the majority shareholder with a 22.5 percent stake, but has to share management responsibilities with government-appointed executives, since the ministry is the second-largest shareholder, with about 20 percent of shares.

“Without a strong modern service industry, Taiwan cannot increase its competitiveness on the world stage,” Taishin Financial spokesman Welch Lin (林維俊) said.

The financial sector is the backbone of modern service industries, accounting for 70.4 percent of GDP in the UK, 58 percent in the US, 55.2 percent in Singapore and 49.1 percent in Hong Kong, Lin said.

In Taiwan, the figure is only 25.8 percent, suggesting ample room for growth, Lin said, adding that the government could lend a helping hand with supportive policy measures.

Domestic financial institutions have difficulty improving their earnings ability because of excessive competition amid a fragmented and crowded field, Lin said, although they can offer high value-added services.

“Taishin Financial will temporarily slow down its push for the merger, but it will not compromise the rights of 200,000 shareholders,” Lin said, indicating that the company would not give up the idea altogether.

Taishin Financial shareholders in June authorized company chairman Thomas Wu (吳東亮) to take legal steps, if necessary, to integrate the two banks. One week later, Chang Hwa Bank’s executive directors approved plans to study the matter.

The former state-run lender, where Taishin Financial controls a majority in the boardroom, has put the merger on hold in a show of goodwill to newly installed Financial Supervisory Commission (FSC) Chairman William Tseng (曾銘宗), Lin said.

“We hope that under Tseng’s leadership the FSC will formulate policies” favorable for financial institutions, Lin said.

Taishin Financial will also halt efforts to expand into the life insurance industry until the Chang Hwa Bank merger is no longer in limbo, Lin said.

In March the FSC rejected Taishin Financial’s attempt to buy the local unit of New York Life Co, citing concerns over its capital strength.

Taishin Financial shares closed 1.18 percent lower at NT$12.6 yesterday, underperforming the TAIEX, which fell 0.86 percent, Taiwan Stock Exchange data showed.

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