In light of a streak of banking scandals this year, Financial Supervisory Commission (FSC) Chairman Wellington Koo (顧立雄) yesterday said that the commission intends to impose penalties next week on companies that have failed to meet corporate governance requirements.
The list of companies is likely to include SinoPac Financial Holdings Co (永豐金控) — which has been plagued by infractions in its banking, leasing and securities brokerage units — as well as the state-run lenders Bank of Kaohsiung (高雄銀行) and First Commercial Bank (第一銀行) for their participation in a syndicated loan to finance troubled Ching Fu Shipbuilding Co’s (慶富造船) contract to build minesweeper ships for the navy.
Koo declined to provide further details, as the commission is finalizing its assessment of companies’ performance against corporate governance metrics.
Improving corporate governance has been the commission’s priority, and that it would adopt a “carrot and stick” approach to regulating companies, Koo said at a forum held by the Taiwan Insurance Institute in Taipei.
PRINCIPLES
However, Koo said that the Stewardship Principles for Institutional Investors (機構投資人盡職守則) have received little attention from local financial companies.
Since the principles were launched by the Taiwan Stock Exchange in June last year, only about 9.8 percent of insurers, 2.6 percent of banks and 3.1 percent of securities brokerages in Taiwan have subscribed to them, Koo said.
The principles are designed to encourage financial institutions to leverage their expertise, size and influence and carry out their fiduciary duties by participating and voting in shareholder meetings of investee companies, and engaging in dialogue with management.
Agreeing to the principles is especially important for financial companies, as they invest with the public’s money and must be subject to higher governance standards than companies in other industries, Koo said.
The stewardship principles are an important tool to help companies build a culture of ethics and compliance, as external pressures from regulators alone cannot safeguard the interests of the investing public, Koo added.
Koo said companies on the Taiwan Corporate Governance 100 Index have on average yielded 35.45 percent returns since June 2015, outperforming the 29.55 percent gain posted by the TAIEX.
ROBUST GROWTH
The nation’s insurance industry saw robust growth throughout this year, Taiwan Insurance Institute chairman Kuei Hsien-nung (桂先農) said.
In the first 10 months of this year, life insurance companies posted NT$112.1 billion (US$3.73 billion) in pretax profits, 17 percent higher than in the same period last year, while total premium collections rose 13.4 percent to NT$2.78 trillion, Kuei added.
General insurers saw pretax profits rise 13.4 percent to NT$13.3 billion, with total premiums gaining 7.4 percent to NT$130.3 billion, Kuei said.
Kuei said he is upbeat about further growth for insurers as regulators continue to ease controls on investments in the government’s “five plus two” innovative industries program, which could help cut reliance on overseas investments and tackle the challenges of Taiwan’s aging population and shrinking workforce.
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