Newly appointed Mega Financial Holding Co (兆豐金控) chairman Michael Chang (張兆順) yesterday said that his first task would be to address the public criticism that has beset the state-run company since it ran into regulatory problems in the US.
Last month, Mega International Commercial Bank (兆豐銀行), the flagship bank of Mega Financial was fined US$180 million by the New York State Department of Financial Services (DFS) for breaching rules against money laundering.
The incident stemmed from a compliance failure, Chang said, adding that the bank was not involved in money laundering activities.
Photo: EPA
“There are stark discrepancies between the views of the public and the management team that must be addressed,” Chang said during a handover ceremony in Taipei.
The company would look into what happened and produce an explanation that the public would find satisfactory, and also remedy the firm’s shortcomings on internal oversight measures, Chang said.
He said that the heavy regulatory penalty resulted from the company’s inaction between March last year — when the DFS notified the bank it was looking into its activities — and Aug. 19, when it issued the fine against Mega Bank.
“US regulators do not have a zero-tolerance policy regarding compliance failures, and 95 percent of cases have not resulted in punitive fines,” Chang said.
Mega Financial would try to explain why the company had forgone the opportunity to communicate and appease US regulators, he said.
The company would release its findings to the public within the confines of Article 48 of the Banking Act (銀行法), which stipulates that banks must preserve confidentiality of client information, barring orders by judicial bodies or instances involving significant delinquent debt write-offs involving sums greater than NT$50 million (US$1.58 million).
Regarding allegations that Mega Bank laundered money on behalf of the Chinese Nationalist Party (KMT), Chang said that he has not yet familiarized himself with ongoing investigations.
He also said that he would look into allegations of questionable loans made by state-run Mega Bank to the KMT, a reference to Democratic Progressive Party (DPP) caucus whip Wu Ping-jui’s (吳秉叡) claim that the bank had lent US$50 million to KMT-run Central Investment Co (中央投資公司).
“I am here to solve problems so that the company can move past its current difficulties,” Chang said, adding that his appointment was not politically motivated, and that he would remain neutral even if fallout from the scandal extends to the KMT’s ill-gotten party assets.
“Without a solid foundation of regulatory compliance and internal controls, the bank would be building profits on quicksand,” Chang said.
On Thursday, Taiwan Ratings Corp (中華信評) said changes in the management of Mega Financial would not impact its operating capacity immediately, adding that the company has enjoyed stable operations for many years, and its business would not go astray simply because of a change in the board of directors.
Shares in Mega Financial gained 0.71 percent to close at NT$21.4 yesterday, rising for the first time following four consecutive sessions of declines.
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