Sat, Aug 04, 2018 - Page 12 News List

Financial firms must lead online banks, FSC says

By Ted Chen  /  Staff reporter

Financial Supervisory Commission Chairman Wellington Koo takes a seat before a closed-door meeting with executives of financial companies in Taipei yesterday.

Photo: Wang Sung-yi, Taipei Times

The Financial Supervisory Commission (FSC) yesterday stood firm on its position that financial institutions should lead the management of online banks.

“We wish to see financial statements for Web-only banks published as a subsidiary under a financial company,” FSC Chairman Wellington Koo (顧立雄) said.

There could be room to reduce the mandatory stake that financial institutions must hold in online banks from half to 40 percent, Koo said, following protests by technology companies that the requirement favors financial sector incumbents and would stifle innovation.

“We still want financial companies to have the most influence over the management of online banks — that has not changed,” Koo said, amid concerns that the move would mean that non-financial companies could hold stakes of up to 60 percent.

Financial companies should be the biggest single shareholder in Web-only banks and hold a stake of at least 25 percent, he said.

The commission has said that online banks should be led by industry incumbents, as they are familiar with compliance requirements to prevent money laundering and enhance information security.

At least three teams of financial and non-financial companies have voiced their intention to compete for two Web-only banking licenses when the application process begins next month.

Although non-financial shareholders in an online bank can collectively own 60 percent, a financial institution, as the biggest shareholder, reserves the right to exert influence over management and to include the venture on its financial reports, Banking Bureau Deputy Director-General Jean Chiu (邱淑真) told a news conference following a closed-door meeting with company executives to gather opinions on the commission’s plan to develop the financial sector.

The commission is mulling further deregulation to bring the nation’s investment platforms and environment up to speed with international hubs such as Hong Kong, Chiu said.

The FSC has received companies’ suggestions and would continue to work with industry associations to ease rules, such as allowing insurers and banks to offer new services like trusts and power of attorney for the elderly, as well as raising caps on a number of investment vehicles, Chiu said.

Overall, the plan aims to expand the scale of local financial companies and help them broaden their global networks to better serve Taiwanese companies operating around the world, she said.

In addition, the commission wishes to leverage the nation’s financial sector to promote growth in other industries and to attract foreign investment, she said.

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