The labor union for state-controlled Taiwan Cooperative Bank voiced its strong opposition yesterday to the government's sudden removal of Sean Chen (陳沖) as chairman of the country's second-biggest lender. They also threatened to stage a strike over his sacking.
"It was too abrupt and we are all stunned," said Huang Che-huei (黃哲輝), a board member of Taiwan Cooperative that represents the bank's labor union.
"The government should give more respect to professionals, especially when the employees all recognize Chen's efforts and plans for the bank's future," Huang said.
PHOTO: CHEN TSE-MING, TAIPEI TIMES
The Ministry of Finance announced on Thursday night that Bank of Taiwan chairman Hsu Teh-nan (許德南) would replace Chen, whose three-year term was due to expire on Dec. 31.
Chen's removal, coming one day before the bank was scheduled to hold an extraordinary general meeting to elect a new board of directors, created speculation that the move was triggered by political, not professional considerations.
Some speculated that Chen was not close enough to the pan-green camp politically.
"We believe that could be the reason," said one Taiwan Cooperative executive, speaking on condition of anonymity.
The Cabinet, however, rebuffed such speculation yesterday, saying that Chen's removal had nothing to do with politics.
"Every time we choose candidates for senior bank management, their professional skills are always our only concern. It is not fair to these professionals to be politically labeled," Government Information Office Minister and Cabinet Spokesman Cheng Wen-tsang (
"Many people have criticized the reshuffle by saying that Premier Su Tseng-chang (蘇貞昌) is trying to promote his own favorites as he gears up for the 2008 presidential election. Personnel reshuffles in banks have nothing to do with politics, for God's sake," Cheng said.
Despite a potential for awkwardness, Chen presided over yesterday's shareholders meeting.
"I was advised of my removal at noon on Thursday," he said. "I feel sorry that I will not able to realize my commitments to the employees."
Chen said that he had a premonition of his fate three months ago, when he declined Su's offer to become a minister without portfolio on Aug. 29.
Chu Yu-chun (朱玉君), an analyst who tracks the financial sector at SinoPac Securities Corp (永豐金 證券), said she believed political considerations play a role when it comes to appointing the heads of state-run financial institutions.
"The government would want someone obedient to execute its policy," Chu said.
Under Chen's leadership Tai-wan Cooperative has tried to secure more autonomy in its decision-making, such as its alliance with BNP Paribas and its plan to evolve into a financial holding firm, which could run counter to the government's plan to dispose the lender next year, Chu said.
Chen became chairman of Taiwan Cooperative in July 2004. The lender became a publicly traded company in November 2004 and began its privatization process in April last year.
Chen said he is proud of the bank's performance, citing earnings per share of NT$2.31 in the first 11 months of the year -- the highest among local banks -- and a healthy financial structure with a declining bad loan ratio of 2.2 percent and rising coverage ratio of 55 percent.
"At least people would not say that my stepping aside is because of incompetence," he said.
Meanwhile, the personnel change could create uncertainty about the strategic alliance with BNP Paribas. The two parties inked an agreement at the beginning of this month to form an asset management joint venture.
"I've known about the change," Laurent de Meyere, managing director of BNP Paribas Taipei Branch, who is on holiday outside the country, told the Taipei Times in a telephone interview yesterday.
He said he expects policy continuity.
But the bank's union held an ad hoc meeting yesterday to discuss the possibility of calling a strike to protest the shakeup and the potential for a takeover by predatory family-run financial groups.
At yesterday's shareholder meet-ing the union obtained four of the 19 board seats. The Ministry of Finance controls 11 seats; the other four went to institutional shareholders like the Taiwan Provincial Farmers Association (台灣省農會).
Shareholders also agreed to raise the capitalization of the bank to a maximum of NT$60 billion (US$1.84 billion) from the current NT$45 billion for future capital enhancement through fundraising.
Union members, however, said they are worried that the Tsai family would take the opportunity to boost their holdings from current combined 4.4 percent to gain more control of the bank.
The Tsai family controls Cathay Financial Holding Co (
"We will not give them an easy time if the Tsai family wants to take over us," said Huang, a union-appointed board member.
Additional reporting by Jimmy Chuang
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