Taiwan's Commercial Banks In Corporate Governance Reform-cum-stock Reform Of The Agricultural Bank Of China Revelation

The 11^th Five-year period is a key period for further financial reform of our country. th Five-year for National Economy and Development Formulated by CPC> has pointed out "we shall improve corporation management structure, strengthen internal control mechanism, enhance the asset quality, gaining capability and servicing level of financial institutions". By analyzing commercial banks in Taiwan, this paper aims to offer some reasonable suggestions to the reform of Agricultural Bank of China (ABC), one of the big four state-owned banks.With research of the elementary theories on corporation governance, the article elaborates the special requirement for commercial banks, presents the standards to qualify as a well-structured commercial bank. The author also reviews the history of corporate governance reform of Taiwanese banks, and discussed three phases of the history. The first phase was the establishment of private banks and privatization of state banks, the second was the key period of strengthening corporate governance, and the third was implementing Financial Holding Company Act. Three banks, -Cosmos bank, Chang Hwa bank and SinoPac holdings-, were taken as examples to support author's perspectives. By comparing these banks with ABC, the author gives following suggestions:Firstly, to accelerate the pace of ABC's IPO is an urgent task. Ownership based governance is likely to reduce the corrupting influence of unaccountable power on government. At the same time, by transforming corporations into more democratic institutions, institutional investors can unleash the wealth-generating capacity of "human capital" which is based in the skills and knowledge of corporate employees.Secondly, ABC holding company should be established. Under such a holding company, a specialized subsidiary which is to manage NPL is expected to be set up. The subsidiary separates the bad debts from the better assets, and then better assets are packaged to get listed. After that, write off the NPL by profit generated by the listed...