State-run lenders can assess whether to exit the US market or downsize operations if legal compliance costs seriously erode profitability, Minister of Finance Sheu Yu-jer (許虞哲) said yesterday.
Sheu, whose ministry controls sizeable stakes in state-run banks, made the statement when asked to comment on stiff fines imposed by the New York Department of Financial Services (NYDFS) on Mega International Commercial Bank (兆豐銀) last year and one that Hua Nan Commercial Bank (華南銀行) is likely to face for compliance failures.
“State-run banks can conduct assessments themselves to see if they are better off pulling out of the US market, as some private competitors have done to avoid heavy legal compliance costs,” Sheu told a meeting of the Legislative Yuan’s Finance Committee.
The ministry is not in a position to dictate their moves, Sheu said.
Cathay United Bank (國泰世華銀行) and Taipei Fubon Commercial Bank (台北富邦銀行), the banking arms of Cathay Financial Holding Co (國泰金控) and Fubon Financial Holding Co (富邦金控) respectively, have shut down their branches in Los Angeles, the minister said.
The NYDFS last year fined Mega Bank’s New York branch US$180 million for its failure to meet money-laundering requirements and might mete out fines to Hua Nan Bank for unspecified negligence.
State-run Taiwan Cooperative Bank (合庫銀), Chang Hwa Commercial Bank (彰銀), Land Bank of Taiwan (土銀), First Commercial Bank (一銀), Bank of Taiwan (台銀) and Taiwan Business Bank (台企銀) also have branches in New York.
While the Financial Supervisory Commission is responsible for monitoring the operations of banking institutions, the ministry can urge them to conduct cost and risk analyses, National Treasury Administration Director-General Frank Juan (阮清華) said.
“They should weigh if business potential warrants the risk and cost,” Juan said.
Compliance costs drove Taishin International Bank (台新銀行) last year to drop the idea of setting up a branch in New York.
In other developments, the minister dismissed media reports that First Financial Holding Co (第一金控) chairman Joseph Tsai (蔡慶年) has offered to resign over a troubled syndicated loan to Ching Fu Shipbuilding Co (慶富造船), saying he would be notified if the report was true.
Meanwhile, the Finance Committee approved plans to extend license tax breaks for electric cars by another four years to encourage sales and cut carbon emissions.
There are 929 electric cars in Taiwan and the number could rise to 5,795 in the next four years, the Ministry of Economic Affairs said.
The bill, which still faces a second and third reading, also seeks to remove the cap of three electric cars individual charity organizations can own to qualify for the tax exemption.
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