The Financial Supervisory Commission (FSC) yesterday said it would formulate a strategic plan to boost the financial sector, as it faces tremendous challenges, including persistently low interest rates at home and in major markets worldwide.
While the nation has not been subject to negative interest rate policies seen in Japan or aggressive easing measures seen in Europe, persistently low interest rates have left local banks with weak growth prospects, FSC Chairman Lee Ruey-tsang (李瑞倉) told a news conference.
CUTTHROAT PRICING
As local banks fight over an ever-shrinking profit pool in the domestic market, they have brought their penchant for cutthroat price competition to overseas markets in search of higher returns, Lee said.
“Consequently, foreign regulators have voiced their concerns, saying they do not welcome such practices,” Lee said.
The commission’s strategic plan — which would be ready in about two months — could include the addition of a differential approach to financial sector regulation, Lee said.
DIFFERENTIATION
Local banks have been targeting similar opportunities with very little variation in product and services offerings, and the situation could be changed if differential regulations are made available for banks of different scales, characteristics and compliance records, Lee said without elaborating.
The plan would be formulated on a bottom-to-top manner, and would be based on feedback from financial companies and industry associations, Lee said, adding that regulators remain open to further deregulation.
Lee said he is optimistic that the financial sector’s earnings would surpass NT$500 billion (US$16.54 billion) this year, after falling to NT$475 billion last year following a peak of NT$542.8 billion in 2014.
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