With around 50 to 60 percent of the nation's banking assets controlled by state-run entities, financial regulators are under pressure to meet President Chen Shui-bian's (陳水扁) ambitious goal of halving the number of state banks to six by the end of this year. Though consolidation tops the government's financial reform agenda as a way to increase the competitiveness of local banks, the pace of merger activity has been slow, despite some merger and acquisition deals being sealed in the past few years.
Minister of Finance Lin Chuan's (
Taiwan Business Bank is the nation's ninth-largest lender by assets, with a market share of 4.1 percent and a distribution network of 125 branch offices. It is 41 percent owned by the Ministry of Finance and a few other state banks. Though it has the political mission of granting loans to small and medium-sized enterprises, the bank's market share in this niche is only 12 percent due to strong competition. But because of its past weakness in credit appraisal in its role as a funding channel for particular economic sectors, this lender has lost an average of NT$1.6 per share in each of the past four years.
Critics are concerned that the ministry's failure to sell its stake in Taiwan Business Bank may lead to a more cautious approach by potential buyers of domestic banks, given higher-than-expected integration risks such as strained labor relations. Market observers also worry that the four-day work stoppage by the bank's union could inspire other state bank unions to follow suit and obstruct mergers in the future. Chang Hwa Commercial Bank's (
Moreover, the Taiwan Business Bank incident has caught lawmakers' attention, and may prompt them to demand reviews of every government proposal on disposing of state bank shares. It will certainly increase uncertainty for investors and make it more difficult to reach Chen's target.
The planned privatization of the Central Trust of China (
Even so, the government should learn something from the incident and act to respond to investors' demands for a more open and transparent bidding process. Most importantly, the government needs to convince the market of its political will to proceed with privatization. If the government stops pushing forward, the market will take it as a sign that something is terribly wrong with the policy.
Labor disputes may have been the straw that broke the camel's back as far as Taiwan Business Bank is concerned. But even before those troubles, the bank's poor asset quality and performance made potential buyers far underbid the finance ministry's price targets.
This should teach both management and employees the lesson that their main responsibility is to strengthen the bank's operating efficiency, because successfully privatizing the bank is in the entire nation's interest. Anyone who jeopardizes that privatization and thus hurts the bank's business returns will therefore not be forgiven, even if they do so in the name of job security.
A failure by the Chinese Communist Party (CCP) to respond to Israel’s brilliant 12-day (June 12-23) bombing and special operations war against Iran, topped by US President Donald Trump’s ordering the June 21 bombing of Iranian deep underground nuclear weapons fuel processing sites, has been noted by some as demonstrating a profound lack of resolve, even “impotence,” by China. However, this would be a dangerous underestimation of CCP ambitions and its broader and more profound military response to the Trump Administration — a challenge that includes an acceleration of its strategies to assist nuclear proxy states, and developing a wide array
Twenty-four Chinese Nationalist Party (KMT) lawmakers are facing recall votes on Saturday, prompting nearly all KMT officials and lawmakers to rally their supporters over the past weekend, urging them to vote “no” in a bid to retain their seats and preserve the KMT’s majority in the Legislative Yuan. The Democratic Progressive Party (DPP), which had largely kept its distance from the civic recall campaigns, earlier this month instructed its officials and staff to support the recall groups in a final push to protect the nation. The justification for the recalls has increasingly been framed as a “resistance” movement against China and
Jaw Shaw-kong (趙少康), former chairman of Broadcasting Corp of China and leader of the “blue fighters,” recently announced that he had canned his trip to east Africa, and he would stay in Taiwan for the recall vote on Saturday. He added that he hoped “his friends in the blue camp would follow his lead.” His statement is quite interesting for a few reasons. Jaw had been criticized following media reports that he would be traveling in east Africa during the recall vote. While he decided to stay in Taiwan after drawing a lot of flak, his hesitation says it all: If
Saturday is the day of the first batch of recall votes primarily targeting lawmakers of the Chinese Nationalist Party (KMT). The scale of the recall drive far outstrips the expectations from when the idea was mooted in January by Democratic Progressive Party (DPP) caucus whip Ker Chien-ming (柯建銘). The mass recall effort is reminiscent of the Sunflower movement protests against the then-KMT government’s non-transparent attempts to push through a controversial cross-strait service trade agreement in 2014. That movement, initiated by students, civic groups and non-governmental organizations, included student-led protesters occupying the main legislative chamber for three weeks. The two movements are linked
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