New Finance Supervisor William Tseng
No Enemies, Only Friends
An experienced technocrat popular with industry insiders, the new Financial Supervisory Commission minister shares his take on the future direction of Taiwanese finance in an exclusive interview.
No Enemies, Only FriendsBy Yi-Shan Chen
From CommonWealth Magazine (vol. 528 )
The biggest surprise in Taiwan's latest Cabinet reshuffle was the appointment of Deputy Finance Minister William Tseng as new head of the Financial Supervisory Commission (FSC), a choice roundly applauded within the financial industry. Will that choice be as warmly received among investors, bank depositors and insurance policy holders? What kind of administrator is William Tseng?
Let's take a look at his schedule during his first week in office:
Between being appointed to his new post on Monday afternoon and knocking off for the weekend on Friday, Tseng attended farewell gatherings at the Bank of Taiwan and the Ministry of Finance, as well as the official handover of his new post at the FSC; the grand opening of the Taipei Branch of the Keelung Second Credit Cooperative, an institution run by the family of lawmaker Hsieh Kuo-liang; and the entire hour-long launch of United Daily News TV. He even led a group taking part in a ministerial meeting discussing third-party payment systems.
Not At All Like Chen Yu-chang
During his first four days in office, Tseng enjoyed more public exposure than his low-key predecessor Chen Yu-chang had during his entire 38-month tenure. Chen generally attended only official functions of the FSC and peripheral agencies, largely eschewing industry and media-sponsored events.
"He is the polar opposite of Chen Yu-chang," says one KMT Central Standing Committee member.
Chen's aloofness earned him little popularity. ("With government like this, who needs enemies," Internet mogul Jan Hung-tze once quipped at Chen Yu-chang's expense.) Conversely, Finance Minister Chang Sheng-ford once described Tseng as a man who "has no enemies, only friends."
Since the FSC was founded nine years ago, it has had eight ministers or acting ministers, William Tseng being the eighth. Who is this man with no enemies who now stands as custodian of Taiwan's financial sector?
Of humble origins, Tseng was born in Jiayi in 1959, the only child of illiterate farmers. Upon completing undergraduate and graduate studies at National Chung Hsing University, Tseng took the civil service examination and was offered a position with the Department of Customs Administration under the Ministry of Finance.
Tseng fortuitously came to the attention of then-department director Lai In-jaw, and he subsequently followed Lai from the Customs Administration to the deputy finance minister's office, and then to the Department of Finance of the former Taiwan Provincial Government. Tseng was a key associate of Lai's for 12 years before moving on to Taiwan Cooperative Bank.
"His greatest asset is his meticulousness. When supervisors assign him a task to perform, he's really on the ball and follows up thoroughly," observes Chan Te-en, an assistant professor at Ming Chuan University's Department of Security Management and Social Work and former agent at the FSC's Financial Examination Bureau, who also studied under Lai In-jaw.
His wealth of experience as a confidential secretary has built for him an impressive professional network and keen insight. As the Taiwan Provincial Government was being phased out, Tseng left government and, with a helping hand from Lai, landed a job as a vice president at Taiwan Cooperative Bank at age 39. By 42 he was bank president, the youngest among Taiwan's state-owned banks.
Bank President, Interrupted
At 45, when Tseng wouldn't sign on with the 2004 presidential campaign of incumbent candidate Chen Shui-bian, he was out. Within the space of a month, he dropped three levels in bureaucratic standing, from bank president with 7,000 employees to deputy section chief.
But it wasn't long before Tseng's impressive credentials caught the eye of Kong Jaw-sheng, who brought no administrative experience with him when taking office as the first FSC minister. Tseng was appointed chief secretary, tasked with establishing official correspondence between the various bureaus, departments and commissioners, setting up the FSC's institutional and organizational structure and handling public relations.
His meticulous nature and tactful executive capabilities have repeatedly led to his being dispatched to "put out fires." Personnel on the FSC's Financial Examination Bureau are drawn from the Central Bank of the Republic of China (Taiwan), the FSC's Banking Bureau and other agencies in a strained depositor-guarantor dynamic. Tseng took over as Financial Examination Bureau director in a time of crisis, with his predecessor having left under suspicion of corruption and the post having stood vacant for more than a year. He set about handling sensitive cases such as China Development Financial's hostile takeover bid against Taiwan International Securities Corp.
"He actually handled and turned over for prosecution the most corruption cases during his tenure, yet the negative side-effects have been limited," says Chan Te-en, who has also worked at the Financial Examination Bureau.
Chan recalls, for example, how during investigations into the second financial reform scandal, there was a moment where Tseng worried that publicly hauling in major corporate executives for questioning could lead to reckless speculation in the media. It was thereupon decided that said executives would be brought in for questioning over the weekend while the press office was closed.
"He's got all the details covered and he would definitely never tell subordinates to back away from anything," Chan says. "The question is, how far do you push? Legally, you must stay on a solid footing, and procedurally, you should avoid destroying people. That's because he believes financial supervisors are not the same as the courts. But when he comes across a case that deserves prosecution, he's definitely going to hand it over to prosecutors."
Tactful, Rather than Slick
Responding as to what he'd learned from Lai In-jaw during their dozen years working together, Tseng says that to keep relationships smooth, it is best to interact with others naturally and honestly, not to be intentionally ingratiating and slick.
Tseng has a toughness acquired from navigating the vicissitudes of the bureaucracy that is seldom seen in government, enabling him to return to the fray stronger than ever following a precipitous fall, says the chairman of one securities house.
When asked how he was able to do it, Tseng freely admits he was as crestfallen as a junior high school kid when he was informed he would have to resign and retire immediately as president of Taiwan Cooperative Bank to make way for another.
But later, when he thought back on it, he realized that despite the setback, "I could not forget that the good graces of numerous people along the way had enabled me, a southern boy of illiterate parents, to become a bank president at such a young age."
When it comes to material possessions, he tries to eschew excess. Having once held the reins of Taiwan's main treasury while with the Taiwan Provincial Government's Department of Finance, Tseng says that both the historical television dramas he loves to watch and his own real world experience have taught him the same thing – that the bureaucracy is cast in iron, but bureaucrats come and go. This reminds him to never forget who he is; no matter how much money he might be making, the material aspects of his life "should remain unchanged."
To this day, he doesn't drive, taking buses and the subway to do his grocery shopping on weekends and taking the Kamalan Bus on outings to Yilan.
"Our family tilled the fields, which is tough, so we were quite frugal and remain so now," says Tseng, who lives with his mother and whose life has remained largely unchanged despite his position in government. As such, he has been able to shift psychological gears and start anew at the FSC within the space of a month.
Come Back Anytime
During his interview with CommonWealth reporters, Tseng said he hoped his personal relationships would remain unchanged now that he is minister.
At the July 31 farewell gathering for the outgoing deputy finance minister, chairmen and presidents of Taiwan's most prominent banks, led by Mega Financial Holding chairman Joseph Tsai, all found time to offer their personal congratulations following the formalities.
"In future you've no need for an appointment, you're welcome anytime," was Tseng's reply, at once thanking and extending an invitation in a display of earnest communication.
"A willingness to communicate is a good thing. What you have to watch out for is compromising too easily and losing your ideals," a KMT Central Standing Committee member with strong ties to finance officials says.
When it comes to the long-term development of Taiwan's financial sector, boosting financial supervision capabilities and codifying them into law is the key. Building the financial market is most definitely not merely a matter of deregulation.
The most obvious example of this is Taiwan depositary receipts (TDRs). TDRs were initially introduced to allow Taiwanese companies already listed on overseas exchanges to list in Taiwan as well. But the results have been anemic. Indeed, Want Want China announced earlier this month its intention to delist its TDRs.
After a life of ups and downs, Tseng returns to the upper echelons of his profession, bearing the public's hopes for the economy on his shoulders. A long path and heavy burden await.
Following are highlights from the CommonWealth Magazine interview:
Q: What form will communication between the FSC and the financial sector take in the future? How will you deal with pressure from interest groups?
A: The FSC is delighted to interact with financial organizations. In the future we intend to coordinate with the various associations in holding quarterly forums to communicate with the industry.
Secondly, for emergencies we have a point of contact, and someone of an appropriate level is always available to talk, depending on circumstances. Interaction between people should be natural, and there is no need to send someone of a lower rank to receive a guest.
But my principle is, you never want to meet alone. At our offices, where minutes and even audio recordings are taken of meetings, the doors of the FSC are always open.
Q: Aside from internationalization, what else is needed in Taiwan's financial sector?
A: There's currently little innovation in Taiwan's financial industry, aside from deploying to other parts of Asia. Taiwan is actually flush with capital. In particular, there's been a lot of money tied up in real estate since the government lowered the inheritance tax. This indicates an inadequate variety of financial products, not enough products in which to invest that money.
I hope to speed up introduction of new financial products, whether brought in from overseas or created ourselves, new financial products are really important and necessary.
Third, we're going to call on banks to refrain from excessive low-end competition. There's cutthroat competition in both lending and syndicated lending right now, and we're constantly hearing about interest rates that are not in accord with the underlying risk.
The FSC will strictly control pricing policies, demanding that interest rates charged do not undervalue the future risk undertaken.
Q: The exit from the market of weaker insurers looks to be a hot topic over the next year or so. How do you intend to respond from a policy perspective?
A: I'd have to look into that further before I could answer.
Q: What is the biggest future challenge for the FSC minister?
A: The exposure of financial operations to international social and operational risk presents a constant, never-ending challenge. The biggest challenge for me is how to get domestic banks and financial institutions to perform adequate risk management.
Q: Lots of people say the conservatism of the FSC is a product of personnel shortages and low morale. How can morale be reinvigorated?
A: All organizations, businesses, have their own corporate culture, and it's up to their leaders to mold a new organizational climate. FSC staff need only be given policy objectives and direction, and they'll be happy to oblige. The quality of the staff at the FSC is actually extremely high.
Translated from the Chinese by Brian Kennedy
Education: BS, National Chung Hsing University, Department of Finance and Taxation; MA, National Chung Hsing University Graduate Institute of Public Policy; PhD, National Taipei University, Graduate Institute of Business Administration.
Work Experience: staffer, Ministry of Finance, Department of Customs Administration (1984-1989); chief secretary to deputy finance minister Lai In-jaw (1989-1983); section chief, Taiwan Provincial Government Department of Finance (1993-1998); vice president/president, Taiwan Cooperative Bank (1998-2004); deputy section chief, Financial Supervisory Commission, General Planning Section; deputy director/secretary-general, Banking Bureau; director, Financial Examination Bureau (2004-2008; deputy finance minister (2008-2013).
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