The biggest difference? “Politics,” he laughed in an interview Tuesday, in which he confirmed an early victory in his quest to boost the island’s banking system — a plan by Citigroup Inc. to buy Taiwan’s Bank of Overseas Chinese.

Hu’s main job as head of Taiwan’s Financial Supervisory Commission since January is to streamline its banking system through mergers and purchases such as Citigroup’s. If completed, the deal would be the second overseas buyout of a lender on the island after Standard Chartered Plc agreed last year to purchase Hsinchu International Bank.

His challenges don’t stop there. The agency he leads has a legacy of failure since it was created in July 2004, with his two predecessors forced to resign over a corruption scandal and a failed bank.

“All Hu needs to do to be a success is not to be forced out under a cloud,” said Forest Chen, chief economist at Taiwan Securities Investment Advisory in Taipei. “His blend of teaching and policy experience also makes him someone who might actually get something done.”

The most complicated political tangle involves China. Although Taiwanese manufacturers have invested US$150 billion in China, there’s an iron wall between their banks. While Hu says he’d like to see change, he admits there’s resistance on both sides. He concludes: “It takes two coins to make a noise.”

Hu, the 66-year-old former chairman of Taiwan’s economic planning council, has a doctorate in economics from the University of Rochester in the U.S. and taught at Purdue University in Indiana.

As an adviser, he helped draft Taiwan’s plan to halve the number of financial holding companies to seven by the end of last year. “Our strength is that we have world class manufacturing businesses, they are globally deployed and need financial services,” he said.

The consolidation wasn’t achieved amidst opposition from the owners and the public. “Our target raised concerns about family-owned businesses controlling our economy,” Hu said.

He declined to set a new deadline, saying he’d like to see “a substantial reduction in the number of banks” in the next two years, and that foreign buyers will be a catalyst.

“Well-known and well-managed banks” entering Taiwan will also introduce competition which can raise local standards to create stronger financial institutions, boosting overall competitiveness, Hu said.

Banks from China are unlikely to be among those anytime soon. China, which regards the island as part of its territory, doesn’t recognize Taiwan’s regulators and the commission has not received any applications from Chinese banks, Hu said.

Taiwan’s investments in China also face restrictions, with its companies barred from investing more than 40 percent of their net assets on the mainland. Taiwanese banks with representative offices in China can’t upgrade them to branches because Taiwan insists on first setting up a regulatory mechanism to monitor them there.

“Real life involves not just professional judgment, it involves politics and other things,” Hu said. “Basic principles still apply: improve competitiveness, market mechanisms, reduce government intervention.”

One legislator is blocking a plan to raise the amount of funds that insurance companies can invest overseas from 35 percent to 50 percent, because she wants the government to lift the ceiling on China investments, he said.

“We’re still trying to convince her of our case,” he said. It’s best not to engage in horse trading, but to do what you can “within your power to make things happen.”

Hu insisted that the commission is color blind, a reference to Taiwan’s two political camps known as the Blues, or opposition Nationalist Party and the Greens or ruling Democratic Progressive Party.

Corruption scandals have tainted the independence-leaning ruling party, and the watchdog’s first chief Kong Jaw-sheng was removed over alleged breaches of government purchase rules. Hu’s predecessor resigned after the collapse of the family owned Rebar group led to a run on its banking affiliate.

Restoring public confidence in the agency is his first priority, Hu said. “We have to earn the trust of the public by our deeds rather than our words,” he said.

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