109 Taiwan Financial Holdings VII. Financial and Other Institutions 1.Taiwan Financial Holdings (1) History At a meeting of the Cabinet held on 15 th August, 2007, the premier of the Executive Yuan issued instructions to begin preparations for establishment of Taiwan Financial Holdings (TFH), and on 1 st January, 2008 TFH was established, in accordance with the provisions of the Financial Holding Company Act, the Company Act, and other applicable laws and regulations, as Taiwan's first state-run financial holding company by the Bank of Taiwan (BOT) in a share swap. On the following day, 2 nd January, 2008, the Bank of Taiwan then spun off its securities and insurance operations to form two separate companies, BankTaiwan Securities (BTS) and BankTaiwan Life Insurance (BTLI). The legal cornerstone of TFH was then laid when the Taiwan Financial Holding Co., Ltd. Act was promulgated by the president of the ROC on 26 th November, 2008. With authorized capital of NT$90 billion, the company has assets of NT$4.2 trillion and ranks as the second largest among Taiwan's fifteen financial holding companies, with operations in banking, securities, and life insurance. TFH is run as Taiwan's flagship financial holding company, and acts as a guiding force in Taiwan's financial industry in support of the government's financial policy, to stabilize financial markets, help industries upgrade, and strengthen the national economy. Anchored by its banking subsidiary, and relying on its holding company platform, TFH intends to take advantage of its integrated resources and cross-selling capabilities to bolster its strength and competitiveness. The holding company's tasks are to maximize corporate value and become a model for financial holding companies in Taiwan, which TFH intends to achieve by: leading Taiwan's financial industry forward onto the international financial stage; leveraging its position as the leading financial holding company; tapping into TFH's enormous resources, vast customer base, highly developed business channels, and strength in universal banking; building up its managerial capabilities; working hard to create cross- selling synergies; achieving cost savings; and improving capital efficiency. (2) Structure and Organization A. Structure Ministry of Finance (Sole shareholder) Taiwan Financial Holdings Ownership percentage: 100% No. of shares owned: 9 billion Capital: NT$90 billion BankTaiwan Life Insurance Ownership percentage:100% No. of shares owned: 1.1 billion Capital: NT$11 billion BankTaiwan Securities Ownership percentage: 100% No. of shares owned: 300 million Capital: NT$3 billion Bank of Taiwan Ownership percentage: 100% No. of shares owned: 7 billion Capital: NT$70 billion
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109
Taiwan Financial Holdings
VII. Financial and Other Institutions
1.Taiwan Financial Holdings(1) History
At a meeting of the Cabinet held on 15th
August, 2007, the premier of the Executive
Yuan issued instructions to begin preparations
for establishment of Taiwan Financial Holdings
(TFH), and on 1st January, 2008 TFH was
established, in accordance with the provisions
of the Financial Holding Company Act, the
Company Act, and other applicable laws and
regulations, as Taiwan's first state-run financial
BankTaiwan Life Insurance Ownership percentage:100%
No. of shares owned: 1.1 billion Capital: NT$11 billion
BankTaiwan SecuritiesOwnership percentage: 100%
No. of shares owned: 300 million Capital: NT$3 billion
Bank of Taiwan Ownership percentage: 100% No. of shares owned: 7 billion
Capital: NT$70 billion
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Government Finance Annual Report for 2010
B. Organization
Board of Directors Chairperson of the Board
General Auditor Auditing Department
Business Operations Committee
Cross-SellingCommittee
Finance Department
Risk Management Department
Accounting Section
Investments Section
AdministrationDepartment
General AdministrationSection
Human Resources Section
Information ManagementSection
Business Development Department Planning Section
Investor Relations Section
Risk Management Committee
Strategic Development Committee
President Executive Vice-President
Supervisor
(3) 2010 Highlights
2010 was the third year in business for TFH.
In addition to coordinating with the objectives
of government’s financial and economic policy
objectives and working to build up the nation's
capacity for economic development, TFH also
focused on: playing its function as a provider of
strategic guidance; improving the group’s co-
operative marketing mechanisms; developing
multiple profit engines; spurring continued
growth of businesses in which it enjoys a
competitive advantage; and establishing its
brand as an industry leader. TFH also made
further strides toward becoming one of the
best financial holding companies in the entire
Asia-Pacific region by building up its shared
business platforms, improving efficiency while
cutting costs, strengthening the group's risk
management mechanisms, establishing core
competencies, and taking accelerated steps to
internationalize the group. During the course of
the year TFH completed the following important
tasks:
A. Business strategies
(A) Motivated by its vision of "tapping into
group synergy and growing into a blue-
chip financial holding company," and
bolstered by its position as the nation's
leading financial holding company,
TFH formulated a groupwide business
management strategy and a specific
plan for implementing it. These will
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Taiwan Financial Holdings
provide guideposts for the management
of TFH and its subsidiaries.
(B) TFH establ ished a per formance
a s s e s s m e n t m e c h a n i s m f o r i t s
subsidiaries. The system features
performance assessment cri teria,
target values, and a scoring method
to evaluate how well the subsidiaries
have done on five fronts- business
p e r f o r m a n c e ; s u p p o r t o f T F H
policy objectives; profitability; legal
compliance; and risk management.
The performance assessments will
induce group subsidiaries to act in
accordance with group strategy to
achieve better business results and
spur rapid improvement in overall group
performance.
(C) TFH took advantage of the functions
of its integrated group structure and
tapped into i ts h ighly developed
channels and huge base of high-quality
customers to gradually build a complete
product line. TFH continued working
on shared business platforms, adopted
methods that enabled the group to
achieve better operating efficiency
and work flows while reaping the “3C”
synergistic benefits.
B. Internationalization
(A) TFH accelerated steps to establish
an Asia-Pacific regional presence,
supported the global moves of Taiwan-
based corporations, kept close track
of changes taking place throughout
an international economy in transition,
actively sought to increase its overseas
business locations and expand the
scope of their business operations,
improved its overseas asset allocations,
worked to set up a comprehensive
Asia-Pacific financial services network,
expanded i ts business footpr in t ,
a n d i m p r o v e d i t s i n t e r n a t i o n a l
competitiveness.
(B) To take advantage of the opening up
of cross-strait relations, TFH adopted
a strategy for developing the Mainland
marke t . TFH cap i ta l i zed on the
strengths afforded by its subsidiaries,
financial management capabilities, and
online banking operations to establish
co-operative tie-ups with the Mainland
financial institutions or foreign-invested
banks there. At the same time, its life
insurance and securities subsidiaries
joined forces to engage in joint business
expansion efforts and broaden their
strategic deployments in the Mainland
market.
(C) TFH continued taking part in the
activities of international economic and
financial bodies, accelerated efforts
to establish co-operation and other
dealings with important international
financial organizations, accumulated
experience in international financial
business, and established and elevated
the group’s international status and
name recognition.
C. Cross-selling synergies
(A) TFH integrated the group's products,
channels, and customer management
resources, and relied on three core
strategies to deepen its cross-selling
synergies. The first strategy calls for
establishing sounder product lines at its
subsidiaries and raising their product
penetration rates. The second calls
for expanding its cross-selling product
platform to meet the diverse needs of
customers. The third calls for entering
into strategic tie-ups with peers that
have special strengths in product
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Government Finance Annual Report for 2010
design in order to provide customers
with tailor-made services, build an
integrated marketing platform for eight
main platforms of business (including
securities brokering, underwriting, life
insurance, and corporate finance),
and use the competitive strength of
its channels to consolidate customer
loyalty and maximize customer value.
(B) TFH bo ls te red i ts c ross-se l l ing
i n f ras t ruc tu re , mak ing changes
in the areas of both systems and
i m p l e m e n t a t i o n . T F H a d o p t e d
rolling targets for both management
and pe r fo rmance assessmen ts ,
strengthened its 4P marketing strategy,
established an integrated standard
operating procedure for its marketing
operations, improved its integrated
product and channels operations,
provided customers with a full range of
financial services, and spurred growth in
its insurance and securities businesses.
(C) TFH built up its managerial capabilities,
and formulated a mechanism for
assessing the performance of i ts
subsidiaries in integrating resources
and marketing operations. TFH adopted
a scoring system for evaluating how
well i ts subsidiaries have done in
implementing policy, contributing to
the group, and in the co-operating of
policy. And TFH awarded administrative
and resource incentives on the basis
of assessment results, to induce its
subsidiaries to take an active part in
cross-selling and reap the benefits of
synergy.
D. Shared logistics management platform
(A) TFH broadened and deepened its
shared logistics platform, continued
expanding infrastructure, and improved
the following eight shared platform
functions: information operations;
personnel exchange; education &
training; legal affairs; real estate
m a n a g e m e n t ; p u b l i c r e l a t i o n s ;
procurement operations; and exchange
of information. TFH also strengthened
its vert ical and lateral integration
mechanisms. By relying on measures at
the holding company level to coordinate
operations and administer the sharing
of resources, TFH built up a powerful
groupwide logistics center.
(B) TFH acted across the board to cultivate
the personnel needed by the group,
p romoted the shar ing o f human
resources among the parent company
and subsidiaries, and established a
system for loans, transfers, and returns
of personnel within the group. On the
basis of the business development
needs of its group companies, TFH
implemented the sharing of needed
professional personnel to get the most
from highly skilled employees, cut
training costs, and make effective use
of human resources.
E. Corporate governance
(A)To support the government’s efforts to
promote corporate governance, TFH
once again retained an impartial outside
organization to assess its corporate
governance, and took steps to improve
both systems and operations. During
the past fiscal year TFH established
a mechanism for interact ion and
communications between its CPAs and
the members of its board of supervisors,
strengthened the transparency of its
website information disclosures, and
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Taiwan Financial Holdings
hired a permanent legal advisor.
(B) TFH completely overhauled its internal
audit and internal control rules to
conco rd w i t h “The Regu la t i ons
Governing the Implementat ion of
Internal Control and Audit Systems
by Financial Holding Companies and
Banking Enterprises,” issued by the
Financial Supervisory Commission. By
effectively running internal controls and
internal audits, TFH provided for better
business management and improved
internal self-regulation.
F. Risk management system
To prepare for adoption of the International
Financial Reporting Standards (IFRS) in
2013, TFH established an IFRS task force to
formulate an IFRS transition plan and work out
related preparatory measures. The task force is
working to revise the TFH accounting system,
internal control system, and information
operations to pave the way for the switchover
to the IFRS.
G. Bank of Taiwan
(A) Implementation of government policy
a. The BOT supported government
initiatives such as the “i-Taiwan
Twelve Projects,” the “Six Major
Emerging Industries,” and “Invest
in Taiwan,” and helped companies
obtain needed financing, thereby
facilitating cash flow management
a n d i n v e s t m e n t p l a n s , a n d
supporting development of the
domestic economy.
b. Guanqian Branch and Sanmin Branch
extended business hours until 5 p.m.
beginning from December 2010.
(B) Lending business
The BOT increased its policy-based
lending. While consolidating its existing
lending to the public sector, the BOT
made active use of the Small and
Medium Business Credit Guarantee
Fund to expand lending to SMEs and
other private enterprises, thus improving
its credit structure and increasing its net
interest spread.
(C) Foreign exchange and international
financing business
a. The BOT supported government
financial policy by establishing a
business location in the Mainland.
The BOT set up a representative
office in Shanghai on 1st February,
2010 and obtained permission to
upgrade to a full branch from the
FSC on 10th February, 2011. This
will accelerate progress toward
the building of a financial services
platform to serve the needs of
Taiwan-invested businesses in the
Mainland and Hong Kong.
b. The BOT obtained permission from
the FSC to provide RMB cash swaps
in Taiwan, and from 26th October,
2010 became a supplier of RMB
cash. Our Hong Kong branch on 29th
January, 2010 began handling RMB
deposits, remittances, and checks,
as well as RMB sett lements of
cross-border trade deals. In addition,
the BOT signed a memorandum
of understanding with the Bank
of China on 24th December, 2010
in order to establish further co-
operative relationships with banks in
the Mainland.
(D) Wealth management and trust business
The BOT actively developed gold
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Government Finance Annual Report for 2010
products and innovative services,
launched a US dollar-denominated
“ G o l d P a s s b o o k ” p r o d u c t , a n d
introduced an online gold purchasing
function to provide customers with a
diverse range of investment services.
The BOT also entered into additional
tie-ups to sell products for other firms,
and is already engaged in co-operative
gold business operations with the Hua
Nan Commercial Bank and the Taiwan
Business Bank, to increase the scale of
its business.
(E) Electronic banking services
The BOT set up its Super Pay website
and actively promoted its financial XML-
based account transfer service, thus
providing a year-round instant payment
service that features a safe control
mechanism and a speedy, convenient,
fu l l y deve loped on l ine payment
procedure.
(F) Capital efficiency
a. The BOT strengthened its financial
and marketing capabilities, actively
developed new derivate products,
and raised its market share.
b. The BOT integrated its management
of New Taiwan Dollars and foreign
currencies, created trading positions
and adjusted investment positions,
made use of a diverse range of
ins t ruments , s t rengthened i ts
treasury operations, and improved
its capital efficiency.
(G) Risk management
The BOT improved the quality of credit
assets, established early warning
antennae, improved the benefits derived
f rom i ts early warning measures,
s t rengthened secondary rev iews
and follow-up assessments, strictly
implemented post-loan management,
stepped up efforts to write off bad debts,
and worked to carry out post-bad debt
write-off management and foreclosure
on debt claims.
H. BankTaiwan Life Insurance Co., Ltd.
(A) Business operations
a. 2010 gross premium revenue came
to NT$56.1 billion, or 146% of the
NT$38.4 billion target for 2010.
b. BTLI launched new policies for
endowment insurance, whole life
medical and heal th insurance,
children's insurance, and children's
whole l ife insurance. BTLI also
launched its first foreign currency-
denominated endowment insurance
policy to meet the diverse asset
allocation needs of its customers.
(B) Financial management
BTLI strengthened the profitability of its
investments in domestic securities and
increased its positions in highly rated
foreign bonds, to achieve higher returns
on capital.
(C) Risk management
BTLI carried out an NT$4 billion cash
capital injection through the issue of
new shares in order to bolster working
capital and regulatory capital, and
improve the company's risk-based
capital rat io. Al l the shares were
subscribed for by the parent company,
TFH.
(D) Customer service
BTLI set up a special service window
for claim settlement matters and an
email contact point for claim settlement
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The Land Bank of Taiwan
matters, thereby expediting its claim
settlement process.
(E) Operating procedures
BTLI set up a NET version life planning
sys tem w i th a more conven ien t
operating interface for its employees,
thereby enabling them to provide more
efficient and higher quality customer
service.
I. BankTaiwan Securities Co., Ltd.
(A) Brokerage business
a. By conducting promotional activities
for its securities financing business,
BTS actively publicized its business
and increased the outstanding
amount of securities financing.
b. Working together with the TFH
subsidiaries of the BOT (Department
of Treasury, Department of Trusts)
and BTLI , BTS deve loped an
integrated marketing strategy to
execute t rading orders for the
four major government funds and
insti tut ional cl ients to reap the
benefits of group synergy.
(B) Underwriting business
a. Personnel resources in BTS's
Underwr i t ing Depar tment may
be expanded in the fu tu re to
accommodate business growth,
depending on how fast such growth
occurs.
b. BTS used the corporate lending
resources of the BOT and worked
together with the Department of
Corporate Finance at the BOT, to
solicit corporate financing business.
(C) Proprietary trading business
a. Proprietary stock trading:
BTS paid over 200 visits to listed
companies, wrote ninety-four reports,
and continued to strengthen the depth
and quality of its reports, in hopes
that that these initiatives will raise the
professionalism of its researchers and
provide useful reference information
for its proprietary trading.
b. Proprietary bond trading:
BTS obtained qualifications as a
central government bonds trader,
took an active part in the primary
bond market, increased the depth
and breadth of its business, and
provided customers with a more
diversified range of services.
(D) Risk management
With an eye to market conditions,
business development, and profi t
pro ject ions, BTS set investment
authorizations and VaR limits, and
calculated its risk-adjusted performance
measures (RAPM) and risk-adjusted
return on capital (RAROC).
(E) Internal management
BTS prepared budgets and year-
end accounts, calculated financial
statement data, performed checking
of accounts, carried out clearing and
settlement operations, and set up an
inter-divisional task force to handle
harmonization with and adoption of
the International Financial Reporting
Standards (IFRS).
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Government Finance Annual Report for 2010
2. The Land Bank of Taiwan(1) History
The history of the Land Bank of Taiwan
dates from 1945 when the Second World War
came to an end. To facilitate implementation of
land policies such as land-rights equalization
and the land-to-the-tiller program in Taiwan, the
government appropriated NT$60 million from
the national treasury as capital to establish the
“Land Bank of Taiwan” in accordance with ROC
law on 1st September, 1946 utilizing the five
branches of the Nippon Kangyo Bank which
had been set up in Taipei, Hsinchu, Taichung,
Tainan, and Kaohsiung in 1922. In May 1985,
the Land Bank of Taiwan became qualified
as a juristic person according to Article 52 of
the Banking Act; on 21st December, 1998, it
became a state-run business organization upon
implementation of the Province Simplification
Statute; on 1st July, 2003 it was re-organized
as the “Land Bank of Taiwan Co., Ltd. (Land
Bank);” further on 21st May, 2004 it was
transformed into a public company to prepare
for the initial public offering of its stocks upon
privatization.
Thanks to the efforts made by the members
of staff, the Land Bank ranks among the World’
s Top 200 Banks in terms of total assets. The
Land Bank will continue to use its advantage
as a real-estate specialty bank to conduct
various special loans pursuant to government
policies so as to enhance national economic
development.
(2) Organization and Functions
The Land Bank is a 100% government-wholly-
owned-and-run bank with an organizational
system that contains the Board of Directors, the
Supervisors, the head office and the branches.
To strengthen the Bank’s supervisory system, a
general auditor mechanism was set up in 1998,
where the Auditing Department was made
directly subordinate to the Board of Directors
so that it could handle auditing matters in an
independent and impartial spirit. The Land
Bank’s management structure consists of the
head office, including twenty-three units, 148
domestic branches (excluding the OBU), the
overseas branches including the Hong Kong
Branch, the Los Angeles Branch, the Shanghai
Branch, the Singapore Branch, and the Ho Chi
Minh City Representative Office in Vietnam,
and six Regional Centers set up in the form
of task forces; as of year end 2010, the
number of employees was 5,732 in total. The
organizational structure of the Land Bank is as
in the chart below.
(3) Major Accomplishments in 2010
The main business achievements of the
Bank as of year end 2010 are summarized as
follows:
A. Deposits
The Bank combined its deposits and real-
estate trust businesses to actively solicit
demand saving deposits. As of year end
2010, the total amount of deposits reached
NT$1,860,400 million.
B. Corporate Banking
As of year end 2010, the amount of
corporate banking loans made by the Bank
reached NT$911,265 million, within which small
and medium enterprises loans accounted for
NT$232,949 million, which total ranked second
among all financial institutions, construction
industry loans accounted for NT$270,175
mill ion with ranked first in the domestic
construction industry loan market, and its 134
lead and joint syndicated lending cases and
thirty-four approved urban renewal loan cases
accounted for NT$34,845 million.
C. Consumer Banking
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The Land Bank of Taiwan
Board of Directors
ChairpersonPresident
General Auditor Department of Auditing
Department of Business
DomesticBranches (148)
Overseas Branches and Offices (5)
Offshore Banking Branch
Department of Corporate Banking
Department of International Banking
Department of Electronic Banking
Department of Treasury
Department of Consumer Banking
Department of Trusts
Department of Wealth Management
Department of Securities
Department of Planning
Department of Business Management
Department of Information Management
Department of Accounting
Department of Human Resources
Department of Credit Management
Department of Loan Management
Department of Risk Management
Department of Credit Analysis and Research
Department of Property Management
Secretariat
Department of General Affairs
Department of Legal Affairs
Department of Ethics
Six Regional Centers
Supervisorsand
Resident Supervisor
Division of Corporate Banking (Executive Vice-
President)
Division of Consumer Banking(Executive Vice-
President)
Division of Strategic Operations
(Executive Vice-President)
Division of Asset Management(Executive Vice-
President)
Division of Administrative
Affairs(Executive Vice-
President)
Note: - - - - - denotes task force.
Organization of the Land Bank of Taiwan
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Government Finance Annual Report for 2010
The Land Bank actively provided policy-
or iented preferent ia l hous ing loans of
“Preferential First House Purchase Loans for
Youth Conducted by State-Owned Banks,”
“House Purchase Loan for Young Homeowners
with Zero Interest Rate for the First Two Years”
and “Integrated House Building, Purchase,
and Repair Loan.” To fully utilize its funds,
the Land Bank created the products of “Elite
Housing Loans,” “Quality Housing Loans,”
“Preferential-Rate Decreasing Term Housing
Loans,” “Tsai-Go-Li Loans” and “Integrated
Consumer Loans.” As of year end 2010,
consumer banking loans reached NT$805,045
million, within which housing loans accounted
for NT$621,056 million and consumer loans
accounted for NT$42,385 million.
D. Trusts
A s o f y e a r e n d 2 0 1 0 , t r u s t f u n d s
managed by the Land Bank included 1,024
types of overseas mutual funds and 494
types of domestic mutual funds, where the
trust investment in domestic and overseas
negotiable securities reached NT$45,146.90
million, and, accumulatively, 711 cases of
real estate trust had been undertaken, with
a total value of NT$80,713.53 million. As of
year end 2010, the Bank had acted as the
trustee institution in undertaking twenty-six
cases of financial assets securitization, with
a total issuance amount of NT$54,250.48
million, and had acted as the trustee institution
in undertaking seven cases of real estate
securitization, with a total issuance amount of
NT$42,422.56 million.
E. Wealth Management
The Bank engaged the public interest to
hold a series of “Colorful LOHAS Charity &
Care Fairs” and financial planning seminars
to enhance communication and relations with
its premier customers. As of year end 2010,
the total written insurance premium from banc-
assurance products reached NT$13,410
million, the transaction volume of trust fund
business reached NT$35,823 million, and
the administrative fee income from wealth
management business reached NT$531
million.
F. Foreign Exchange
As of year end 2010, the Bank operated
forty authorized foreign exchange business
units, eighty-nine branches handing purchase/
sale of foreign currencies and traveler’s checks,
and five overseas branches and representative
offices with the Shanghai Branch opening
on 29th December, 2010. The transaction
volume of foreign exchange business reached
US$38.287 bil l ion as of year end 2010,
within which import transactions amounted to
US$5.248 billion or 13.71% of the total, export
transactions amounted to US$4.757 billion or
12.42% of the total, and remittances amounted
to US$28.282 billion or 73.87% of the total.
G. Securities
The Bank combined secur i t ies and
corporate banking businesses for integrated
marketing, and, as of year end 2010, the
brokerage business volume for the whole
bank amounted to NT$193,220 million, and
the number of securities underwriting cases
amounted to twenty-seven.
H. Non-Performing Loans
As of year end 2010, the Land Bank had
non-performing loans (NPLs) of NT$7,282
million, a substantial decrease of NT$5,344
million or 42.33% compared to year end 2009;
the NPL ratio was 0.43%, a decrease of 0.36%
compared to year end 2009. In addition, the
retrieved debt for year 2010 was NT$4,978
mill ion, which was 42.25% ahead of the
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The Export-Import Bank of the Republic of China
scheduled target, showing a significant result
for the clean-up.
I. Revenues, Expenses, and Profitability
Analysis
For the year of 2010, the Land Bank
repo r ted t o ta l ope ra t i ng revenues o f
NT$38,639.82 million and total operating
expenses of NT$29,290.16 million, leaving
a pre-tax net income of NT$9,349.66 million.
The Land Bank further had a pre-tax return on
assets of 0.44%, a pre-tax return on net worth
of 9.44%, a pre-tax net profit margin of 24.20%,
as well as a pre-tax EPS of NT$1.87 for year
2010.
3. The Export-Import Bank of the Republic of China
(1) History
The Export-Import Bank of the Republic
of China (Eximbank) was founded on 11th
January, 1979, pursuant to the provisions of
the Eximbank Act, as a government-owned
bank specializing in export and import credit in
accordance with the stipulations of Article 94
of the Banking Law, that “The primary mission
of the export-import bank is to extend medium-
and long-term credit to assist the expansion
of exports and the import of equipment and
raw materials needed by domestic industries,”
and Article 95, that “The export-import bank
facilitates the supply of important raw materials
needed by domestic industries, and, with the
approval of the competent central government
authority, provides enterprises with the credit
they need for overseas investment in the
important raw materials they need to engage in
production.”
There are three domestic branches of
the Eximbank, in Kaohsiung, Taichung, and
Hsinchu, respectively; and three overseas
representative offices in Sao Paulo, Brazil;
Kuala Lumpur, Malaysia; and Warsaw, Poland.
(2) Organizational Structure and Business
Items
The Eximbank may engage in the following
business:
A. To provide guarantee faci l i t ies and
medium-, long-term financing facilities
for export transactions for machinery,
equipment, and other capital goods, or the
technical services in connection therewith.
B. To provide guarantee faci l i t ies and
medium-, long-term financing facilities
to exporters engaging in investments in
foreign countries to secure the supply of
essential raw materials or expand export
sales, and to provide guarantee facilities
called for by construction contracts
or to provide medium- and long-term
funding required by engineering firms
in connection with construction projects
abroad.
C. To provide guarantee faci l i t ies and
medium-term financing facilities to export
firms for the import of raw materials,
equipment, and spare parts related to their
export business.
D. To provide guarantee facilities to export
firms to facilitate the obtaining of short-
term financing.
E. To conduct export credit insurance
business.
F. To engage in risk assessment including
that of corporations, financial institutions,
and countries and of risk management.
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Government Finance Annual Report for 2010
(3) Major Business in 2010
A. The balance of average loans outstanding
at the year end, 2010 was NT$83,066
mi l l ion. The amount of guarantees
undertaken totaled NT$7,012 million. The
total amount of export credit insurance
extended during the year was NT$63,957
million.
B. Dur ing 2010, in order to increase
business opportunities, Eximbank held
a total of twenty-one seminars in Taipei,
Taoyuan, Hsinchu, Taichung, Changhua,
Kaohsiung, Hsinchu Science Park and
Taiwan Orchid Plantation and strove to
understand manufacturer ’s needs by
co-operating with the Taiwan External
Trade Development Council, the Institute
for Information Industry, the Taoyuan and
Hsinchu Industrial Society, the Association
of Industries in the Industrial Park Service
Center, Hsinchu Industrial Park Service
Center and Industrial Technology Research
Institute in holding seminars and by visiting
manufacturers in industrial zones.
C. To reduce the impact of the global financial
crisis, the R.O.C. Ministry of Economic
Board ofDirectors
Chairman President
CreditCommittee
ExecutiveVice-President
AuditingOffice
Hsinchu Branch
Taichung Branch
Kaohsiung Branch
Representative Officein Kuala Lumpur,
Malaysia
Representative Officein Warsaw,
Poland
Representative Officein Sao Paulo, Brazil
Offshore BankingBranch
InformationManagement Section
Legal AffairsSection
Department ofLoan andGuarantee
Department ofExport Insurance
Department ofFinance
Department ofAdministrativeManagement
Department ofRisk Management
Department ofAccounting
PersonnelOffice
Ethics Office
ExportInsurance
Committee
ExecutiveVice-President
andGeneral Auditor
Board ofSupervisors
ResidentSupervisor
Organizational Structure of the Export-Import Bank of the Republic of China
121
The Central Deposit Insurance Corporation
Affairs (MOEA) launched the Global
Market Expansion Plan (New Cheng Ho
Plan) to promote Taiwan’s export trade.
Eximbank is responsible for boosting
“The San Pao Project” and executing the
measure of “Shaping the Trade Financial
Environment,” including the promotion
of preferential export loans, export
credit insurance, and re-lending facilities
for exporters; to raise Taiwan’s export
competitiveness, assist manufacturers
in expanding in the global market, and
create employment opportunities.
D. In order to c reate more bus iness
opportunities for domestic exporters and to
encourage a much closer relationship with
trade associations, Eximbank signed a
“Co-operation Agreement” with the Taiwan
External Trade Development Council
(TAITRA) on 30th March, 2010. According
to this Agreement, both entities shall hold
seminars together and Eximbank shall
participate in important exhibitions held by
TAITRA to introduce loan and insurance
fac i l i t ies for domest ic and fore ign
customers. In addition, both entities shall
enhance mutual communication and
cooperation, and set up corresponding
units to exchange business information,
for the purpose of providing updated trade
and financial information to domestic
enterprises.
E. Due to cross-strait relations policies,
Eximbank has actively expanded loans
and related foreign exchange operations
for local exporters/manufacturers to
do businesses with the Mainland in
order to assist domestic exports to the
Mainland, investment, contracted projects,
and funds needed for exporting raw
materials and mechanical facilities to the
Mainland. These measures will benefit
domestic exports and upgrade production
technology, as well as boost the related
industries and economic growth. As
a result, the state of employment will
improve whi le the idea of b i lateral
economy and trade across the strait can
be achieved.
F. The Eximbank actively promoted a new
whole-turnover insurance policy called
“GlobalSure.” The new policy is designed
to cater primarily to the needs of SME’s.
It covers the entire turnover against non-
payment by foreign buyers due to political
and commercial risks. The total insured
amount of GlobalSure policies during the
year was NT$24,305 million, a 107.6%
increase from the previous year.
G. The Eximbank has actively participated
in the “Asia-Pacific Trade Insurance
Network” and is working on a framework
to facilitate and streamline risk-sharing
with regional ECAs in order to support
global trade and investment.
H. The Eximbank continued to collaborate
with commercial banks through their
branch networks to promote export credit
insurance.
I. The Eximbank continued to strengthen its
co-operation with reinsurance companies
to expand its insurance capacity.
4. The Central Deposit Insurance Corporation
(1) History
The Central Deposit Insurance Corporation
(CDIC) was established pursuant to the
Deposit Insurance Act as the sole institution
handling deposit insurance in Taiwan, with
122
Government Finance Annual Report for 2010
Deposit Insurance Premiums and
Problem Insured Institutions
ConsultativeCommittee
Department of Business
Department of Risk Management
Department ofResolution and Inspection
Department ofInspection
International Affairs and Research Office
Department of Accounting
Legal Affairs Office
InformationManagement Office
Secretariat
Personnel Office
Civil Service Ethics Office
Central Region Office
South Region Office
Stockholders’Meeting
Supervisors and Resident Supervisor
ChairmanBoard of Directors
President
ExecutiveVice-Presidents
its objectives being to protect the rights and
interests of depositors in financial institutions,
maintain credit order, and enhance the sound
development of financial business. In order
to implement such legislative intent, the
Deposit Insurance Act empowers the CDIC
with the important mission of handling deposit
insurance and dealing with problem insured
institutions and failed insured institutions. The
CDIC formally commenced operations on 27th
September, 1985. Currently, the CDIC has a
total of thirteen units, namely, departments of
Business, Risk Management, Resolution and
Inspection; offices of International Relations
and Research, Legal Affairs, Accounting,
Information Management, Personnel, and
Civil Service Ethics; a Secretariat; and Central
Region and Southern Region offices.
(2) The Responsibilities of the CDIC
The responsibilities of the CDIC include
handling deposit insurance operations and
managing insurance r isks from insured
institutions, dealing with problem insured
institutions, and researching and formulating
the legal framework for the deposit insurance
system.
(3) Organizat ion of the Central Deposi t
Organization of the Central Deposit Insurance Corporation
123
The Central Deposit Insurance Corporation
Insurance Corporation
(4) Highlights of Work in 2010
A. Deposit insurance operations
(A) In 2010 the Taipei branch of Deutsche
Bank and eleven farmers’ associations
with newly-established credit departments
became insured institutions. At the end of
December 2010 there were a total of 391
insured institutions in Taiwan.
(B) After the CDIC finalized “The Report on
Response Measures Related to the
Termination of Full Deposit Insurance
Coverage,” the Financial Supervisory
Commission, the MOF and the CBC
together announced on 12th August,
2010, that, following the expiration of the
period of full deposit insurance coverage
on 31st December, 2010, the deposit
insurance system would revert to the
limited coverage system beginning 1st
January, 2011, and that the maximum
coverage for each depositor per insured
institution would be doubled to NT$3
million. The average ratio of depositors
whose deposits are covered by the new
maximum coverage to total depositors
has consequently increased to 98.6%.
Moreover, the CDIC looked into amending
Articles 12 and 13 of the Deposit
Insurance Act to expand the scope of
coverage to include foreign currency
deposits as well as interest accrued
on deposits. The revised articles were
subsequently promulgated by Presidential
decree on 29th December, 2010.
(C) In order to speed up the CDIC’s
accumulation of Deposit Insurance
Payout Special Reserves and thereby
strengthen its ability to underwrite risk,
on 24th November, 2010, the competent
authority approved the adjustment
of risk-based premium rates for the
covered deposits of banks and credit
co-operative associations from 0.03%,
0.04%, 0.05%, 0.06% and 0.07% at that
time to 0.05%, 0.06%, 0.08%, 0.11% and
0.15% and 0.04%, 0.05%, 0.07%, 0.10%
and 0.14%, respectively, starting from
1st January, 2011, with the flat premium
rate being maintained at 0.005% for
those insured deposits in excess of
the maximum coverage. For the credit
departments of farmers’ and fishermen’
s associations, the risk-based premium
rates have been maintained at 0.02%,
0.03%, 0.04%, 0.05% and 0.06%, with
the flat premium rate also remaining at
the previous 0.0025%.
B. Handling of the inspection of the regulatory
items in Article 24 of the Deposit Insurance
Act as well as on-site inspections of
insured institutions applying to participate
in deposit insurance
(A) The CDIC inspected the accuracy of
the deposit insurance assessment base
for eleven insured institutions for cases
where inspections revealed deficiencies
in calculating the relevant insurance
premium.
(B) The CDIC handled the inspection
of the content of the electronic data
f i les establ ished by seventy-four
insured institutions. In regard to those
cases where inspections revealed
that def ic iencies existed in thei r
establishment.
(C) As for the on-site inspections conducted
in respect of f inancial institutions
applying to part icipate in deposit
insurance, the CDIC handled on-site
inspections for seven newly-established
c r e d i t d e p a r t m e n t s o f f a r m e r s ’
associations.
C. Managing insurance risks from insured
124
Government Finance Annual Report for 2010
institutions
(A) The CDIC continues to operate the
Financial Early-Warning System. The
CDIC has researched and fine-tuned
the functioning of the system, in line
with the financial environment, thereby
effectively maintaining a firm control on
the operating risk of insured institutions.
(B) The CDIC implements an account
officer analysis system to analyze
the operating conditions of insured
institutions in a timely manner and also
conducts specially-designated audits of
financial statements.
(C) In focusing on the changing financial
environments both domestically and
internationally, the CDIC collects data
on specific business activities of insured
institutions and analyzes the likely
effect that such activities will have on
insurance risk.
(D) The CDIC has formulated “The Criteria for
the Imposition of a Surcharge on Insured
Institutions in Relation to Interbank Call-
Loans During the Period When Deposits
are Fully Covered.” This is beneficial to
the control of insurance risk.
(E) The CDIC dispatches personnel to
attend important meetings of insured
institutions, or else to participate in
business guidance meetings convened
by local governments.
D. Strengthening the information exchanges
and the co-ordination mechanism with
relevant financial supervisory bodies
(A) The CDIC regularly submits to the
relevant competent authorities the
results of examination data rating, as
well as the Quarterly Analysis Reports
of Community Financial Institutions.
(B) The CDIC regularly participates in
meetings of the Financial Supervisory
Liaison Task Force by participating in
the operation of the “Single Window for
Reporting of Financial Supervisory Data.”
E. Organization of “Seminars on the Business Strategies and Management of Insured Inst i tut ions” to effect ively enhance risk management concepts of insured institutions
The CDIC invited high-level managers
of insured institutions to participate in the
“Seminar on Insured Institutions’ Business
Strategies and Management” hosted by the
CDIC in May 2010 at four different venues in
northern, central and southern Taiwan.
F. Handling the problem insured institutions
In 2010 the CDIC finalized the sale by open
tender and settlement of Chinfon Commercial
Bank, and continued to deal with the retained
assets and liabilities and unresolved issues
pertaining to the fifty-six problem financial
institutions that had smoothly withdrawn from
the market. As of the end of the year 2010, a
total of 183 cases where criminal activity was
suspected were submitted to prosecutorial and
investigative agencies, and the number of civil
cases filed involving claims for compensation
totaled 122 cases.
G.Drafting deposit insurance-related laws and regulations
The CDIC finalized a draft of a partial
rev is ion to the Depos i t Insurance Act
encompassing 25 articles. On 31st March, 2010,
the CDIC submitted this draft to the Financial
Supervisory Commission for deliberation.
Subsequently, the amended Articles 12 and 13
were promulgated by Presidential Decree No.
09900353411.
H. International exchange activities
Ever since the CDIC joined the International
Association of Deposit Insurers (IADI) in 2002
as one of its founding members, it has, in line
125
The Taiwan Tobacco and Liquor Corporation
with the Government’s policies, strengthened its
participation in the IADI’s affairs and research
works. The CDIC also emphasizes international
co-operation and collaboration with deposit
insurers around the world. Currently, the CDIC
has signed a Memorandum of Understanding
(MOU) with deposit insurers in Hungary, Japan,
Korea and Vietnam. In 2011, the CDIC will
sign two new MOU’s with the Malaysia Deposit
Insurance Corporation and the Indonesia
Deposit Insurance Corporation.
5. The Taiwan Tobacco and Liquor Corporation
(1) History
The monopoly business was started in
Taiwan during the time of the Japanese
occupation. In addition to maintaining its
monopoly on opium, dating from 1898 under
the Taiwan Governor’s Office, it also expanded
its range of items, firstly by implementing a
monopoly on salt and later camphor. In 1901,
the Taiwan Pharmaceutical Factory, the Taiwan
Salt Bureau, and the Taiwan Camphor Bureau
were merged into “The Monopoly Bureau of
the Taiwan Governor’s Office.” The Taiwan
Governor’s Office then took over tobacco
and liquor in 1905 and 1922, respectively,
and then matches and its own weights and
measures in 1942, and petroleum in 1943.
Therefore, the eight items on which there was
a monopoly before the retrocession of Taiwan
were: cigarettes, liquor, opium, salt, camphor,
matches, petroleum, and the standardization of
weights and measures.
In order to maintain its financial resources
and to minimize taxpayers’ burdens after the
retrocession of Taiwan in 1945, the Taiwan
Government Executive Administration Office
decided to continue the monopoly system,
establishing “The Taiwan Provincial Monopoly
Bureau,” and to reduce the number of
monopoly goods to five items only, namely:
tobacco, liquor, camphor, matches, and the
standardization of weights and measures. In
1947, the Taiwan Provincial Government re-
organized the Bureau into “The Taiwan Tobacco
and Wine Board” and brought it directly under
its authority, and the number of items included
in the monopoly business was reduced again,
this time to three items, tobacco, liquor, and
camphor. Under the regulations as amended in
1951, the bureau came under the supervision
of the Finance Department of the Taiwan
Provincial Government, and became a third-
level agency of Taiwan Province. After this,
the camphor business was ended in 1968 with
the monopoly business of the Taiwan Tobacco
and Wine Board being further reduced to only
tobacco and liquor.
The Taiwan Tobacco and Wine Board
handled the production, delivery, and sales
of tobacco and liquor. It was responsible for
the mass production of sufficient tobacco
and liquor to satisfy public demand and for
the implementation of the tobacco and liquor
Monopoly Regulations. The agencies under
its jurisdiction, such as the tobacco and liquor
distribution units and permitted retailers were
spread around Taiwan and became a strong,
extensive sales network. The monopoly profits
from tobacco and liquor were submitted to the
National Treasury to aid in fulfilling economic
and financial goals. The operations of the
Bureau were very profitable, and the profits
provided to the Treasury accounted for a large
portion of the tax revenue of Taiwan.
In o rder to meet the cha l lenges o f
liberalization and globalization, the Monopolistic
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