The passage of the Financial Institutions Merger Act (FIMA) was delayed yesterday as the Ministry of Finance's (MOF) decision to scrap certain articles was said have met with opposition from lawmakers.
Although Minister of Finance Yen Ching-chang (顏慶章) did make a "respect paying" appearance in the legislature, the move was to no avail as the third reading of the legislation was postponed until Nov. 24.
New Party Lawmaker Hsieh Chi-ta (
The legislation, if passed during the third reading, will allow foreign firms to take majority stakes in local lenders and give regulators the power to force mergers among ailing financial institutions.
While Taiwan's banking industry survived the Asian financial crisis of 1997-1998, the island is widely seen as over-banked, and the government wants to clean up a scandal-ridden industry that's being hurt by rising loan defaults.
Public confidence in the island's banking industry has taken a battering amid a series of scandals implicating lenders.
Taiwan prosecutors, looking for evidence of fraud, raided Chang Hwa Commercial Bank (彰華商業銀行) in August, and in May the government seized Taiwan Development & Trust Corp amid a run on deposits.
Bad loans are also on the rise.
Rising non-performing loans could be "close to 10 percent" of all credits, compared to an official estimate of 5.4 percent at the end of September, Chen Shih-meng, a deputy governor at the Central Bank of China (中央銀行), said last week.
The legislation provides for authorities to license asset management companies to buy bad loans from lenders, and then recover collateral, backing the overdue credits without first having to win court approval.
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