台灣銀行家雜誌

台灣銀行家雜誌

Banker's Digest

Banker's Digest

The Financial Industry Gets a Chance to Shine

109.6台灣銀行家雜誌第126期 / By Pearl Su(蘇偉華)

The Financial Industry Gets a Chance to ShineBankers Digest
pasting The financial industry is standing with the people in the economic response to the pandemic. Bank of Taiwan Chairman Lu Ju-cheng said that as a model Taiwanese bank, his bank reached a consensus with other banks. Helping businesses is equivalent to supporting the steady growth of the financial system. Taiwan can help” is not just a slogan. The world now sees that Taiwan's epidemic prevention efforts from the top on down make it one of the world’s safest countries able to best ensure public health. In the economic battle against the pandemic as well, banks have stood with the people, working with the government to enact a stimulus program that protects both industry and consumers. Lu Ju-cheng, Chairman of Bank of Taiwan and Chairman of the Bankers Association of the Republic of China, spoke at length on the bailouts and relief programs. When Chairman Lu served as Minister of Finance, he observed similarly large and rapid responses by finance departments around the world. Bank of Taiwan, as a model Taiwanese bank, reached a consensus with other Taiwanese banks to rescue the economy without help from the central bank, and has led the response. In order to counter the full body blow impact of the COVID-19 pandemic on the economy, the Executive Yuan enacted a NT$ 1.05 trillion bailout plan, including an original budget of NT$ 60 billion plus a special additional budget of NT$ 150 billion and a further emergency relief fund of NT$ 150 billion. The Central Bank, Postal Savings Bank, and other major banks are providing NT$ 700 billion of lending. On April 24, Bank of Taiwan also quickly provided NT$ 40 billion in financing to China Airlines and EVA Air, leading the bailout in terms of total funding. Lu’s high standards for himself are also reflected in his work efficiency. Bank of Taiwan provided a total of NT$ 82.2 billion in bailout funding, over 20% of the total by publicly held banks and 15% of all banks. Its lending market share is only about 10%. Accessible, simple, and quick Lu is deeply grateful for the efforts of the industry and his colleagues' hard work. As the Chairman of the Bankers Association of the Republic of China, in late April, he convened a meeting on the bailout attended by all directors of 36 banks and agricultural associations. As the first face-to-face meeting of all bank directors in Taiwan, it had tremendous symbolic value. Seeing the Chairman of Far Eastern Bank and his mentor Hou Ching-ing, Lu felt a deep sense of gratitude, increasing his confidence in the industry and the bailout. The bailout has added to Bank of Taiwan’ already heavy workload in its original deposits/lending and overseas business. For labor relief applications, for example, clerks must type in applicants’ information, then verify each field in turn before issuing credit. Multiplied by hundreds and thousands of cases each week, banks were unable to handle the influx. Seeing the urgency to launch the project within 48 hours of the Executive Yuan’s announcement with inadequate human resources, Lu thought back to 2005, when he was also director of Bank of Taiwan, and completed digitalization of student loans ahead of schedule. Why not use this mechanism to optimize the application process? After convening meetings with the IT and financial engineering departments, he decided to place 1-2 computers in each branch so that loan applicants could directly enter their information, greatly reducing human resource requirements and successfully reducing application time while improving accuracy. Because of this idea, 26,000 applications were completed, plus about 100 corporate bailouts a week, from the launch of the program around April 30 until the end of May. Digitalization not only helped optimize know your customer (KYC) requirements, but also more efficiently resolved clients’ needs. Lu thanks all his colleagues for building a digital system within just 48 hours, Through digitalization, banks processing 5,000 relief applications per day have achieved the government’s goal of accessible, simple, and quick processes. The relief package of the Executive Yuan was originally expected to cover 500,000 people. Between the end of April and May 13, 540,000 people applied. The Ministry of Labor expects to add another 300,000. The Bank of Taiwan is confident in its ability to handle these applications. As the pandemic and associated economic fallout continue to worsen globally, central banks are rolling out large stimulus packages. The US Fed and European Central Bank have implemented large-scale monetary easing, and governments have passed large corporate bailouts. The US Department of the Treasury oversaw the US$ 2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act, and the European Finance Ministers Meeting proposed a EUR 540 billion package. The financial industry has played an important role in the fight against the pandemic. Even in the US, which has always had a free-market system, 5,000 financial institutions have demonstrated their teamwork and efficiency under the Paycheck Protection Program (PPP) for SME lending and the CARES Act. European regulators also relaxed regulatory and capital requirements for institutions participating in bailout financing. The Bankers Association similarly implemented a variety of measures to support government policy amidst the crisis. Bankers Association Waives Processing Fees Lu constantly communicated with the Joint Credit Information Center and the Taiwan Clearing House regarding processing fees for relief loans. After the joint decision by the public banks to waive NT$ 300 processing and credit investigation fees for relief loans, former Chairman of the Financial Supervisory Commission Wellington Koo added his support. An SME applying for a NT$ 500,000 loan would have three such fees, of which the one from the bank was waived. Lu believes that because of the entire country’s track record successfully controlling the pandemic, no detrimental knock-on effects have occurred, in contrast to the situation in the U.S., and risky assets have not been severely affected. The financial industry currently has three major tasks: protecting the stability of the financial system, stimulating growth in the real economy, and helping maintain a stable society. With the successful execution of these objectives, the industry will be the cornerstone for a safe and sound recovery. Helping companies get through this crisis is equivalent to investing in these companies to stabilize the financial system. It helps to buy time for companies and gives them a chance to breathe. Further it safeguards the integrity of domestic supply chains and industry ecosystems. Thus, when the economy rebounds, industry can quickly recover and take advantage of new growth opportunities. Challenges and opportunities ahead In mid-April, President Tsai Ing-wen posted a 3-minute video on Facebook and Twitter. “It has been my honor as president to witness the Taiwanese people’s selfless desire to give back to the international community time and again, despite political pressure. Taiwan wants to engage with the world," she said. Taiwan’s control of the coronavirus has won it international plaudits, and once again demonstrated that “Taiwan can help” is not just a slogan. For banks, nothing will be more important than the upcoming reduction in interest margin and possibility of recession caused by the monetary and fiscal responses to the outbreak. On the other hand, there could also be positive impacts such as capital movement, wealth management, and the rise of new industries. Lu, who believes in positive thinking and is convinced that everything will eventually work out for the best, optimistically sees challenges and opportunities for the industry in two respects. The first is that the general global economic environment benefits Taiwan. The US-China trade war seems to have become a permanent fixture during the pandemic, but the main beneficiaries of international trade relocation include Mexico, Vietnam, and Taiwan. All reports suggest that Taiwan ranks among the top beneficiaries from the trade war. After the crisis subsides, Taiwan will be one of the few countries in the world able to keep children safely in school. Lu also added some further positive factors and potential opportunities for Taiwan’s development. Manufacturing orders are continuing to come in, and Taiwanese businesses are ‘voting with their feet’ and moving out of China. Low-value processes are moving to ASEAN countries, but medium-value processes are moving to Taiwan. Building long-term client relationships There are clearly different views on the industries being bailed out, but Lu takes a positive view and believes that this is a great opportunity for the financial industry. Applying for a bailout doesn’t mean that a company is not in good health. Many Fortune 500 companies have been bailed out. Think about it from another perspective: This is an opportunity for the financial industry. Good customer relationship management (CRM) can create a strong foundation now to build long-term partnerships with clients. Lu used Bank of Taiwan as an example. These bailed-out companies are customers who haven’t been contacted in a long time. When this opportunity came knocking, they could not miss it. This is the time for the financial industry to shine.

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109.6台灣銀行家雜誌第126期繁體中文、台灣金融研訓院

相較於2008年金融海嘯,金融機構在監理機關嚴謹的要求下,資本適足率提升,足以因應較大的衝擊,過去是「全民救金融」,今天已翻轉成「金融救全民」。而政府為讓銀行積極參與各項紓困政策,金管會也宣布,銀行業接軌巴塞爾資本協定三(Basel III)、風險權數LTV計算法及系統性重要銀行增提內部管理資本共三大監理措施,都將延後實施,希望銀行能更有空間投入資源於紓困救助,幫助台灣產業度過此次危機。