Japanese bank to help Chiao Tung reform its systems

Chiao Tung Bank (交通銀行) yesterday signed a two-year consultancy contract with Japan's Shinsei Bank to upgrade the Taiwanese lender's information-technology and operational infrastructure.

The deal is also expected to help with Chiao Tung's reorganization of its branch network, paving the way for it to expand into the consumer banking business, Cheng Shen-chih (鄭深池), chairman of Chiao Tung's parent company -- Mega Financial Holding Co (兆豐金控) -- said at a press conference yesterday.

The upgrading of Chiao Tung's systems will help reduce the bank's operating costs by an estimated US$10 million in the first year and US$17 million in the second year.

"Following the improvement in the IT infrastructure, we hope to increase the bank's revenues by US$15 million in the first year and by US$35 million in the second year," Cheng said.

Cheng yesterday praised Shinsei's experience in turning around the Japanese lender in four years by rejuvenating its technology infrastructure, which helped cut costs and generate revenue.

If Shinsei's operational and consumer business model succeeds in Chiao Tung, Mega Financial may consider extending the partnership with the Japanese bank, he said.

With 1,300 staff, Chiao Tung runs 34 outlets in Taiwan and abroad, mainly offering medium- to long-term development credit and equity and venture capital investments.

Shinsei Bank chairman and chief executive officer Masamoto Yashiro yesterday said he was upbeat about the partnership between Shinsei and Chiao Tung since both have a similar background in industrial banking.

Yashiro said his bank's cost-effective automated infrastructure laid a solid foundation for the bank to double its client accounts within four years. Call centers and the Internet handle 60 percent of the bank's transactions, Yashiro said.

The IT reform in his bank cost US$60 million over eight months and involved no lay-offs, he added.

The Tokyo-based bank, previously known as Long-Term Credit Bank (LTCB) of Japan, was forced to de-list from the Tokyo Stock Market in 2001 after it went bankrupt in 1998. After a three-year effort to restructure the bank, Shinsei started trading its shares on the Tokyo Stock Exchange on Feb. 19 and closed at ?827 per share on the first trading day -- a 58 percent surge from its opening price of ?525.

The number of Shinsei's branches grew from 25 to 29 and the number of staff grew from 2,000 to 2,400 after tapping into the retail banking businesses, Yashiro said.

As a guest speaker, Vice Finance Minister Yang Tze-kaing (楊子江) lauded Shinsei's experience in facilitating medium- to long-term loans and direct investments as well as its success in corporate restructuring.