Low profit margins and high risks were the main reasons behind Citibank Taiwan's recent decision to halt loan services for automobile purchases, the Chinese-language media reported yesterday.
When the US-based bank halted its auto loan services in July, it had issued a total of NT$5.3 billion in auto loans to more than 22,000 buyers, the newspaper said.
In comparison, the UK-based Standard Chartered Bank had only 1,300 clients with total auto loans of NT$140 million and ABN AMRO of the Netherlands had only 300 or so clients with a total of NT$34 million, the report added.
Lackluster interest in Taiwan's auto loan market has been common among foreign banks, which have to compete with financing companies cooperating with the car dealers, the report said.
With the economic doldrums driving up non-performance loan ratios, the high risks involved in automobile loans -- including the speedy decline of a car's value and the difficulty and high cost of seizing it for non-payment -- has led to the decision to withdraw from that market, the report quoted unnamed bank officials as saying.
In March, Citibank decided to halt real-estate loan services in central and southern Taiwan as a result of a slump in the areas' property market.
The bank was looking for ways to deal with bad loans and it auctioned off some 60 real-estate properties -- which were collateral from home mortgage defaults -- in July and September.
Besides working to unload its collateral, Citibank Taiwan plans to focus on credit card and investment-related time deposit products to boost its revenues, the report said.
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