Foreign investors yesterday continued to dump shares of First Financial Holding Co (
The Cabinet has not yet approved Steve Shieh's (謝壽夫) resignation, but Cabinet Spokesman Chou Jung-tai (卓榮泰) said Premier Frank Hsieh (謝長廷) will meet with the banker soon to make his decision.
Yesterday, foreign investors sold over 32 million First Financial shares, bringing net selling volume above 64 million shares during the four trading days since last Friday.
Shares of First Financial dropped NT$0.6 to close at NT$23.8 on the local bourse yesterday. The shares have slid 6 percent since last Friday.
Shieh offered to step down on Monday after a controversy erupted when he used the English expletive "shit" during a legislative question-and-answer session last Thursday.
He was appointed by the government to sit on First Financial's board two years ago.
The Cabinet is likely to approve the 66-year-old banker's resignation, Chou said.
Foreign brokerages reacted negatively to the issue.
In a report issued on Tuesday, Deutsche Bank said it believed the "resignation is the culmination of frustrations Shieh has faced dealing with labor unions at First Financial," as his attempts to reform the bank require a significant re-organization.
Considering the strength of labor unions, Deutsche Bank expressed concerns.
"Taiwan's financial sector reform will stall and foreign banks are increasingly likely to avoid the market because of the labor unions," it said.
Morgan Stanley also said Shieh's resignation will bring questions as to the future of the lender's internal restructuring, which began just six months ago under his leadership.
"We believe the change in chairman as well as the difficulty in selling Chang Hwa Bank (
The government currently owns a 23 percent stake in First Financial, the nation's fourth-biggest financial services provider by assets, after the lender became privatized at the end of 1997, when government-owned shares dropped to below 50 percent.
As the nation's economy is expected to slow to 4.21 percent growth this year from 5.71 percent last year, the banking sector may experience slow growth in their loan and wealth management businesses, Sherry Lin (
Moreover, First Financial and other banking shares will face additional pressure as no substantial merger and acquisition activity has emerged since the government vowed to consolidate the industry in October, Lin said.
As for possible candidates to take over Shieh's position, local media reports have singled out Ray Dawn (
Both Dawn and Lin, however, reportedly denied the speculation.
Thomas Lee (李桐豪), professor of money and banking at National Chengchi University, said the likelihood of either of them being selected is low as the government would need a heavyweight to carry on with the company restructuring and finally the merger project with Taishin Financial Holding Co (台新金控).
He said the government would either promote a high-ranking official from within the company, or appoint a senior banker from a private financial institution to continue the reforms Shieh started.
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