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Gov't Resumes Financial-Merger Policy

2011/03/22 | By Philip Liu

Taipei, March 22, 2011 (CENS)--Despite the controversies associated with the second financial reform, the government has decided to push a new wave of financial mergers, mainly among those with major government stakes.

Chen Yuh-chang, chairperson of the Financial Supervisory Commission (FSC), pronounced the resumption of the financial-merger policy yesterday (March 21), saying that there is an urgent need for domestic financial institutions to expand their scale and as such the government will push financial mergers again, under the principle of respecting market mechanism. Chen is the first ranking financial official to push financial mergers in public, following the failure of the second financial reform.

Market insiders pointed to Chang Hwa Bank and Waterland Financial Holding as two candidate targets for the proposed financial mergers, as both are scheduled for the reelection of their board of directors and supervisors this year. The government has been actively increasing its stake in Waterland, in an apparent attempt to achieve a major influence for its management.

Lee Suh-der, finance minister, noted that every government-owned financial institution has been undertaking strategic planning for the expansion of their scales, either via merger or alliance.

Chen Yuh-chang put forth the financial-merger policy during a forum on “how to augment the financial competitiveness,” organized by the Taiwan Financial Services Roundtable. He also suggested two other directions for augmenting Taiwan's financial competitiveness. First is the establishment of a system of information transparency, in conformance to international practice, and the adoption of international accounting criteria, so as to effectively enhance the international rating of Taiwan's capital market and cut overseas fund-raising cost for domestic enterprises. Second is acceleration of cross-Taiwan Strait financial exchanges, for which the FSC is revising related law/regulation.