TAIPEI (Reuters) - Taiwan’s top financial regulator said on Tuesday that corporate governance is his top policy priority and companies failing to meet standards will be brought into line.
Wellington Koo, new chairman of the Financial Supervisory Commission (FSC), told a news conference that corporate governance was necessary for Taiwan’s banks and listed companies as many firms are still controlled by their founding families.
Koo said he wants to incentivize better corporate governance, but will impose regulatory penalties if necessary to achieve that goal.
“If companies fail to operate effectively, if they lack integrity in their conduct, then they’ll get hit with the stick,” Koo said. “We hope to help banks rise above their reputation for putting family interests first.”
More than half of Taiwan’s 15 financial holding firms as well as many major business conglomerates are family-run, raising concerns about their ability to put their fiduciary duties to shareholders ahead of the controlling family’s interests.
Koo takes the job of FSC chair as part of a new cabinet organized by incoming premier William Lai, appointed by President Tsai Ing-wen last week in a reshuffle in response to sagging approval ratings.
The island’s banking industry, among the top 10 in Asia with T$45 trillion ($1.5 trillion) in assets, has seen limited earnings growth in its crowded home market, raising the prospect of mergers.
Koo said the FSC would not push mergers between state-run banks, but will build a “friendly environment” for mergers among private banks.
Reporting by Faith Hung; Editing by Jacqueline Wong