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Pact risks financial
autonomy: expert
SECURITY CONCERNS: A former FSC chairperson said
that under the service trade agreement, Chinese investors could seize control of
eight financial holding companies
By Chris Wang / Staff reporter
A former government official warned yesterday that Chinese investors could
become majority shareholders of up to half of Taiwan¡¦s 16 financial holding
companies and almost 40 percent of the banks in Taiwan under the cross-strait
service trade agreement.
¡§The question is whether the nation wants to hand its financial autonomy to a
country which claims that Taiwan is part of its territory and does not rule out
taking it by force,¡¨ former Financial Supervisory Commission (FSC) chairperson
Shih Chun-chi (¬I«T¦N) said.
Shih, who headed the financial regulatory agency in 2006 and 2007, made the
comments at a forum organized by the Democratic Progressive Party (DPP) to
examine its governance performance between 2000 and 2008.
While the DPP has focused its opposition to the agreement on the pact¡¦s possible
negative impacts on the local beauty parlor sector, the printing and publishing
industries and small businesses, Shih said that the banking sector might be most
affected when the pact takes effect.
Under the agreement, Chinese investors would be allowed to hold up to 10 percent
of the total shares of financial holding companies and 20 percent of the total
shares of any financial holding company¡¦s subsidiary bank, he said.
Most shareholders of the current 16 financial holding companies control less
than 10 percent of the total shares, among them the Koo (¶d) family, the biggest
shareholder of CTBC Financial Holding Co (¤¤«Hª÷±±) with 8 percent of the total
shares, he said.
Shih estimated that Chinese capital would be able to control eight of the 16
financial holding companies and up to 14 of Taiwan¡¦s 38 banks.
¡§After the signing of the service trade pact, the door has been opened. Now, it
is a national security issue,¡¨ Shih said.
Local bankers who wanted to expand their businesses in China have been lobbying
and advocating the benefit of an open banking market, focusing only on their
personal gain, without taking national security into consideration, he said.
The DPP initiated two financial reforms while it was in power, with the first
reform successfully reducing non-performing loans and the success of the second
reform, which aimed to reduce the number of banks, still pending, he said.
Hu Seng-cheng (J³Ó¥¿), also a former FSC chairman under the DPP administration,
and Lu Chun-wei (¿c«T°¶), a researcher at the Taiwan Institute of Economic
Research, both agreed that the DPP was able to improve financial regulatory
efficiency, which was the main reason Taiwan was able to stay relatively
unaffected by the global financial crises in 2001 and in 2008.
If Taiwan is to face future challenges to its financial stability, the primary
source of instability would inevitably come from China, given the increasing
exchanges across the Strait, they said.
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