President Chen putting `his men' into top posts

President Chen Shui-bian (陳水扁) over the past two weeks has replaced top officials at five major state-run companies -- raising questions about whether politics rather than business considerations were behind the shake-ups.

On Wednesday, the chairman, president and vice president were replaced at China Bills Finance on orders from a state-backed investment fund. The official explanation is that the reshuffle is needed to bring in new blood that will help get the nation's state-run financial institutions into shape.

But analysts have their doubts.

"It's probably more a question of politics rather than financial problems at China Bills," said Gary Tsai, who helps manage NT$3.6 billion of stocks at ING CHB Securities and Investment Trust Ltd. "There are plenty of other banks with worse bad-loan ratios than China Bills."

First Commercial Bank President Tseng Chien-cheng (曾建成) was named as chairman of China Bills, replacing Shueh Wei-chung (薛維忠).

China Bills' president Tsai Kao-ming (蔡高明) was replaced by Thomas Lee (李基存), former president of Polyvest Bills Finance.

Other top heads that rolled recently were the chairman of Chiao Tung Bank on July 16, and the chairman of Bank of Overseas Chinese on July 20.

The executive secretary the Cabinet's Development Fund, Chang Siu-lien (張秀蓮), said the reshuffle at the state-run financial institutions was due to poor performance and not partisan maneuvering, as has been suggested by local media.

But analyst Gary Tsai pointed to China Bills' healthy financial numbers, noting its low bad loan ratio of 3.9 percent.

That compares with 5.89 percent of total outstanding loans extended by domestic banks as of the end of March, according to the central bank.

The government's development fund instigated the changes to improve management and operations at the company, said George Shiu, the fund's deputy director.