A task force charged with reforming Taiwan's grassroots financial system has decided that poorly run farmers or fishermen's credit divisions should be closed to protect the interests of deposits and maintain stability in the sector, the Chinese-language United Daily News reported yesterday.
The task force decided that strong credit divisions should be transformed into regional agricultural banks, the paper said.
But for poorly run credit divisions, the management of those with negative net worths should be replaced and these divisions will fall under the deposit insurance mechanism and resolution trust system. In addition, these credit divisions could be closed.
Rules are currently being drafted for implementing the policies, the paper said.
Meanwhile, in related banking industry news, Taiwan's bloated banking sector will be streamlined this year with the the mergers of at least 10 banks, officials said yesterday.
About five financial holding companies will also be set up after Taiwan's legislature passes a law governing financial holdings firms, Premier Chang Chun-hsiung (
Financial Minister Yen Ching-chang (顏慶章) added that Chang's estimates represented the government's "lowest goal" in creating greater efficiency in Taiwan's banking and financial sector.
The proposed legislation on financial holdings firms would facilitate mergers by allowing holding companies to control banks, insurers and brokerages. Yen said he hoped the law will be passed no later than May this year.
Taiwan's government has been under intense pressure to bolster the island's economy, which analysts have said may lose its competitive edge amid a weak and overcrowded banking sector that is saddled with non-performing loans.
The government announced last month that three state-run banks will merge to form the largest bank in Taiwan.
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