Consolidation not a fix for state banks

INFLEXIBLE:Implicit requirements such as maintaining branches in unprofitable areas and preferential rates for public employees will continue to weigh on banks, Fitch said

Taipei Times
Date: Apr 14, 2015
By: Crystal Hsu  /  Staff reporter

The government’s efforts to promote the consolidation of state-run financial institutions will not reverse their structural weaknesses, even though the move might help them to better compete in Asia, Fitch Ratings Inc said in a recent report.

State-run financial institutions command 50 percent of the market by assets, but they tend to be less commercially oriented in operations, which leads to depressed loan pricing and weak margins compared with their private peers, the report said.

Surplus liquidity coupled with weak domestic credit demand weighs on the sector’s profitability, the report said.     [FULL  STORY]

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