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.
Having lived through former British prime minister Boris Johnson’s tumultuous and scandal-ridden administration, the last place I had expected to come face-to-face with “Mr Brexit” was in a hotel ballroom in Taipei. Should I have been so surprised? Over the past few years, Taiwan has unfortunately become the destination of choice for washed-up Western politicians to turn up long after their political careers have ended, making grandiose speeches in exchange for extraordinarily large paychecks far exceeding the annual salary of all but the wealthiest of Taiwan’s business tycoons. Taiwan’s pursuit of bygone politicians with little to no influence in their home
In a recent essay, “How Taiwan Lost Trump,” a former adviser to US President Donald Trump, Christian Whiton, accuses Taiwan of diplomatic incompetence — claiming Taipei failed to reach out to Trump, botched trade negotiations and mishandled its defense posture. Whiton’s narrative overlooks a fundamental truth: Taiwan was never in a position to “win” Trump’s favor in the first place. The playing field was asymmetrical from the outset, dominated by a transactional US president on one side and the looming threat of Chinese coercion on the other. From the outset of his second term, which began in January, Trump reaffirmed his
It is difficult not to agree with a few points stated by Christian Whiton in his article, “How Taiwan Lost Trump,” and yet the main idea is flawed. I am a Polish journalist who considers Taiwan her second home. I am conservative, and I might disagree with some social changes being promoted in Taiwan right now, especially the push for progressiveness backed by leftists from the West — we need to clean up our mess before blaming the Taiwanese. However, I would never think that those issues should dominate the West’s judgement of Taiwan’s geopolitical importance. The question is not whether
In 2025, it is easy to believe that Taiwan has always played a central role in various assessments of global national interests. But that is a mistaken belief. Taiwan’s position in the world and the international support it presently enjoys are relatively new and remain highly vulnerable to challenges from China. In the early 2000s, the George W. Bush Administration had plans to elevate bilateral relations and to boost Taiwan’s defense. It designated Taiwan as a non-NATO ally, and in 2001 made available to Taiwan a significant package of arms to enhance the island’s defenses including the submarines it long sought.
RSS