Financial Supervisory Commission (FSC) Chairman William Tseng (曾銘宗) yesterday called on local banks to end their price-cutting competition, adding that the industry needs to develop a healthier business environment.
“The banking sector’s cut-throat competition is putting it in a difficult situation,” Tseng said during a question-and-answer session at the legislature’s Finance Committee.
In response to lawmakers’ concerns about the price-cutting measures widely adopted by Taiwanese banks, Tseng said the situation has deteriorated.
He said Taiwanese lenders have cut interest rates on loans amid fierce competition not just in the domestic market, but also in overseas markets such as China, Cambodia and Vietnam.
Lawmakers also raised concerns that state-owned banks’ high exposure to companies in the flat-panel industry may indirectly pose a threat if firms fail to settle the debts.
Minister of Finance Chang Sheng-ford (張盛和) said state-run banks’ exposure to the nation’s flat-panel industry totaled millions of New Taiwan dollars, with debtors operating a reasonable strategy of borrowing to repay loans.
The commission said banks’ exposure to the solar power, flat-panel, LED and DRAM industries stand at about NT$600 billion (US$20.35 billion), and it is keeping a close eye on the situation.
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