New commission starts to oversee the banking sector

The Cabinet-level Financial Supervisory Commission (SFC), chaired by Kong Jaw-sheng (龔照勝), yesterday officially kick-started its operation as an umbrella organization to centralize and oversee the nation's banking sector.

After being sworn into office, Kong yesterday vowed to prioritize the investigation into the financial scandal involving Procomp Informatics Ltd's default on a NT$2.98 billion corporate bond payment.

"Lessons should be learned from the Procomp incident to clarify its financial partners' regulatory responsibilities while adopting aggressive measures to protect stock investors," Kong said at a press conference.

To prevent similar scandals, the commission held its first weekly meeting later yesterday and decided to introduce changes to financial markets to enhance corporate governance.

The commission said it will submit legal revisions to the Accounting Law (會計法) and the Securities Transaction Law (證券交易法) to the Cabinet for review before July 14.

The committee will also charge the nation's financial institutions a 0.03 percent supervision fee, which will amount to a total of NT$470 million a year to fund its operations.

The commission, first proposed in 1999 by former premier Vincent Siew (蕭萬長), will have four major bureaus under its umbrella with a total workforce of 900. The Legislative Yuan passed an organization bill for the commission in 2001, paving the way for its establishment.

The lineup of the newly-appointed commission leadership include vice chairwoman Susan Chang (張秀蓮), who doubles as head of the bank examination bureau, Gary Tseng (曾國烈), Wu Tang-chieh (吳當傑) and Mark Wei (魏寶生), who respectively head the banking bureau, the securities and futures bureau and the insurance bureau.

At the inauguration ceremony, Kong vowed to aggressively develop the nation's bond markets and investment banking businesses while relaxing inappropriate financial restrictions to attract foreign investments in local capital markets.

"The government's regulatory role should make more of pushing forward self-discipline principles among financial institutions rather than the implementation of financial regulation," Kong said, stressing the importance of a market-oriented and risk-based regulatory system.

The entrepreneur-turned-chairman also vowed to carry out the Cabinet's financial blueprint by developing Taiwan into a regional financial hub, where direct and indirect financial capabilities will be enhanced to diversify financial products and expand the sector's transaction scale.

Following his pledge to adopt a de-regulatory move, the chairman also expressed his liberal stance on cross-strait financial exchange, saying that his nine-member committee, which has two vacancies, will soon hold discussions on the relaxation of restrictions on China-based Taiwanese businesses to list on the local stock markets.

Tseng yesterday said that the government has no plan to allow Chinese banks to open branches here due to their high ratio of financial leverage and non-performing loans as well as low capital reserves.