ABN-AMRO looks to greater China, India

India and the greater China region will be the two most important markets for ABN-AMRO Bank in its attempt to become a truly global bank, said Paul Scholten, the outgoing Taiwan country head of ABN-AMRO Bank.

"You have to be active in these two markets if you want to become a global bank," said Scholten, who will be based in Amsterdam covering the bank's European consumer and commercial banking business.

Foreign banks in Taiwan will either have to be "niche players or become local players" -- which means competing mainly with local counterparts, Scholten said.

Citibank, which has formed a strategic alliance with Fubon Group (富邦集團), is becoming a local player, though Scholten said ABN-AMRO will not "automatically replicate" the Citi-Fubon model.

Scholten, who took over the helm of the Taiwan branch of the Dutch banking giant in 1996, will also be responsible for the firm's global diamond finance business.

ABN-AMRO will be looking for "some kind of merger" in Taiwan after the passage of the Financial Holding Company Law (金融控股公司法) in its efforts to expand operations here, Scholten said.

"It takes at least three to four years to complete a merger," he said.

Post-merger work is vital, he said, because if the merged banks fail to integrate correctly, they may then again become a takeover target. While increasing asset size is important, local banks should focus more on profitability so that they will be better able to endure economic downturns, Scholten said.

He said Taiwan will probably have around 15 banks in the next five years, with the largest banks taking about a 20 percent market share -- the same as in Holland or Singapore. "Taiwan does not need 53 banks," he said.

The recent appeal by local business tycoons to roll over the debt of troubled firms may be justified if the cutting the credit line to these corporations will speed up their demise.

"Banks should not pull the rug if it is possible for [borrowers] to repay the loan later," he said. "But one should not indefinitely roll over those debts ... because at the end of the day someone has to pay back the interest."

In 1999, ABN-AMRO acquired the consumer banking operations of Bank of America. Last year it acquired Kuang Hua Securities Investment and Trust Co Ltd (光華投信) and formed ABN-AMRO Asset Management Co.