The Financial Supervisory Commission (FSC) yesterday encouraged local financial conglomerates to buy up Asian peers to enable them to develop into regional players.
FSC Chairman William Tseng (曾銘宗) made the remark at a closed-door meeting with top executives of the nation’s 16 financial holding companies.
“It is both necessary and urgent for domestic financial institutions to expand in Asia because scale matters,” Tseng said, restating his wish that one or two financial firms will grow into a regional player over the next three to five years.
Tseng suggested purchases of existing foreign banking subsidiaries because capital investment fails to guarantee a controlling stake and could delay expansion.
The commission encouraged companies with “sound and strong” balance sheets, including Mega Financial Holding Co (兆豐金控) and Cathay Financial Holding Co (國泰金控), to develop into regional banks.
While expanding, financial firms should avoid overconcentration in China, Tseng said, as the government will continue its cautious and progressive approach in regulating the sector’s exposure to China.
Local financial firms, especially banks, have pressed for looser caps on their total exposure to China.
The commission suggested that companies should seek to raise their net worth instead, saying that doing so will give them greater room for investment in China and increase their risk tolerance.