Several bankers yesterday lauded President Chen Shui-bian's (
At a recent meeting with his top economics advisors, Chen said he hopes to reduce the number of state-run banks to six by the end of next year, while increasing the market share of three domestic banks to above 10 percent.
He also proposed halving the number of financial holding companies in 2006 while encouraging at least one domestic bank to list shares in an overseas stock market or to turn its management over to a foreign owner.
"Those will be very important milestones to achieve, but it's a question of how," Citigroup Global Markets Taiwan Ltd chairman Tu Ying-tzyong (
Tu said that the government should use market capitalization, instead of market share, to gauge the health of domestic banks. Market cap, which is derived by multiplying a com-pany's share price by its number of shares outstanding, is a quick way of putting a price tag on a company.
"The local financial market will still be overcrowded with seven financial holding companies if they are not turning a profit," Tu said.
The best approach would be to nurture at least two to three domestic financial-service companies to become regional players in the Asia-Pacific markets with a market cap of over US$20 billion, he said.
Despite the difficulties involved, four to five leading, innovative domestic banks should also be developed, while the nation's remaining financial institutions should be encouraged to transform themselves into niche banks, Tu said.
First Financial Holding Co (
However, Huang said that the government should encourage mer-gers to create synergy, rather than just halving the number of banks as a means of addressing the nation's over-banking plight.
He also expressed concern over the foreign-ownership proposal, citing a bad experience when First Financial was accused of inappropriately profiting foreign investors in its issuance of global depository receipts (GDRs) to attract foreign investors earlier this year.
"There should be concrete supporting measures to implement the government's consolidation goals," Huang said.
Peng suggested that the government come up with "carrot-and-stick" measures, such as tax breaks and branch licenses, to motivate the private sector to meet the government's goals.
The government will face great challenges in merging state-run banks, as it will be very painful for them to rationalize costs by laying off employees and shutting down redundant branches, he said.
Joseph Lyu (
Market forces will naturally edge non-performing banks out of the marketplace, allowing leading banks to compete with their regional competitors, Lyu said.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The New Taiwan dollar and Taiwanese stocks surged on signs that trade tensions between the world’s top two economies might start easing and as US tech earnings boosted the outlook of the nation’s semiconductor exports. The NT dollar strengthened as much as 3.8 percent versus the US dollar to 30.815, the biggest intraday gain since January 2011, closing at NT$31.064. The benchmark TAIEX jumped 2.73 percent to outperform the region’s equity gauges. Outlook for global trade improved after China said it is assessing possible trade talks with the US, providing a boost for the nation’s currency and shares. As the NT dollar
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
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