| Summary: | 碩士 === 國立臺灣大學 === 財務金融學研究所 === 90 === The Taiwan financial industry has been evolving from an industry characterized as oligopoly to an industry that is of excessive competition since the government loosed the control a decade ago. The establishment of new private banks in the early 1990’s, in a limited market, resulted in an overcrowded market of players lacking operating scales, but who compete in the similar financial products. The banking industry subsequently suffers from declining profitability, the average return on equity dropped from the 13.35% in 1992 to the low of 4.19% in 2001 while the industry continues to be plagued by lack of economy of scale.
In the wake of WTO entry, the industry concludes that keys to competitiveness against international rivals rest upon “ the expansion of enhanced customer services against the reduction of numbers of players in order to raise economy of scale”. These keys become the consensus by the industry to meet the international challenges.
The government therefore published “Financial Institutions Merger Act” as the legal basis to offer tax benefits for the encouragement of mergers of financial institutions. The government further published in June 2001, to be effective November the same year, “Financial Holding Company Act” aiming at increasing the operating scales of the new institutions and resolving the industry crisis over financial assets. The industry responded by applying the setting up of holding companies for larger operating scales over expanded product offerings, and sought for further alliance between industries.
The thesis devotes the 2nd chapter in exploring the background, purpose and the current development for the financial holding company, in addition to the analysis on the long term impact to the Taiwan financial industry brought upon by the financial holding company in areas of competition, service and profitability (cost control). The chapter will further discuss the short/long term impact on the corporate over the liabilities management and how corporate can meet up with the changes.
The 3rd chapter will focus on the alternative restructuring models. In particular, the chapter will elaborate the advantages and disadvantages over the models of mergers, universal banking concept, and the financial holding company.
The 4th chapter will theorize the performance comparisons by the different models by analyzing the case of the future merger among Bank of Taiwan, Land of Taiwan, and the Central Trust of China. The merger, if successful, will be the largest merger in the history of this country. For the moment, the merger, after four terms of Ministers of Ministry of Finance, remains uncertain to be hinged upon future government policy and the resolution of consolidation issues after merger.
The 5th chapter draws conclusions and recommendations after in-depth examination of the cost and obstacle associated with the pursuit of economy of scales and the analysis of the future challenges facing financial holding company in terms of points to be made in the performance evaluation.
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