Newly installed Financial Supervisory Commission (FSC) Chairman William Tseng (曾銘宗) yesterday voiced support for the consolidation of the domestic banking industry so long as acquisitions and mergers are carried out using free-market mechanisms that meet regulatory requirements and are in the public interest.
Tseng made the statement after being sworn in as the nation’s top financial regulator.
“I agree to the consolidation because the 38 domestic banks are relatively fragmented and small in terms of scale compared with their foreign counterparts,” he said.
Taiwan has the lowest interest rates in Asia because banks generally adopt a cut-throat pricing strategy to win customers.
However, acquisitions and mergers must meet the three principles, the 54-year-old said.
Citing the last concern, the Ministry of Finance, the second-largest stakeholder in Chang Hwa Commercial Bank (彰化銀行) has objected attempts by the largest stakeholder, Taishin International Bank (台新銀行), to merge the two lenders and make it the main subsidiary of Taishin Financial Holding Co (台新金控).
Tseng, a former president of state-run Taiwan Cooperative Bank (合庫銀), said Taiwan’s banks should strengthen their business via organic growth and integration so they become more competitive on the international stage.
While seeking expansion, domestic lenders must comply with all regulations and keep an eye on controlling risk, Tseng said, adding that he would strike a balance between financial supervision and allowing the sector more room for development: “In the absence of risk control and discipline, financial institutions cannot be sustainable.”
Domestic lenders should diversify their product lines and lift their presence in Southeast Asia and other parts of the continent in keeping with other Taiwanese businesses, he said.
Tseng also urged lenders to show support for companies in different industrial sectors because by doing so they could help advance the nation’s industrial development.
The new FSC head, widely lauded for his communication skills, said he would discuss the issue of third-party online payment services with his colleagues in the hope of finding a win-win solution that can help facilitate the nation’s e-commerce industry without comprising safety on the Internet.
Tseng also gave his approval to the cross-strait service trade agreement being reviewed by the legislature, saying its benefits outweigh the negatives.