Taiwan's relatively small banking sector could be attractive to overseas investors if it can be further liberalized, as foreign banks are focused on snatching a piece of China's developing finance market, analysts said.
"Foreign banks' interest in investing in Taiwanese lenders depends on how much further the opening-up policy on the Chinese market will go," said Shirley Yang (楊慶祺), a fund manager who tracks Taiwan's finance sector and manages a NT$1.2 billion (US$35.65 million) portfolio at Invesco Taiwan Ltd, last week.
Taiwan is a mature finance market and given that the nation's professionals enjoy credibility in bank management, consumer banking know-how and advantages in language and culture, it is an attractive partner for international banks wishing to tap into China's fledgling retail banking business, where credit card penetration remains low, Yang said.
Taiwanese banks, which combine the merits of both US management knowledge and Japanese-style service, are well-positioned to be successful in the fast-growing economy on the other side of the Taiwan Strait, she said.
"But all of this will not materialize without liberalizing the bans on the Chinese market," the analyst said.
China currently only allows Taiwanese lenders to set up representative offices and bans them from conducting loan business.
Taiwan's financial authorities are considering allowing China's banks to open representative offices in Taiwan, which could prompt Chinese authorities to allow Taiwanese banks to upgrade their representative offices in China to branches.
Domestically, the government has vowed to create a minimum of one local bank run by foreign investors or listed on an overseas market as part of its plan to consolidate the banking sector.
But, no significant international investment deals have been reached since the failure in May of a global depository receipts (GDR) issuance by state-run Chang Hwa Commercial Bank (彰化銀行) of 1.4 billion shares. Interested bidders reportedly included Japan's Shinsei Bank Ltd and a consortium formed by US Lone Star Funds that included the Carlyle Group Ltd and Dutch ING Group NV.
"Foreign banks are buying China's financial institutions one after another, driven by the market's expected huge development potential," said Joseph Yeh (
Overseas investors remain interested in acquiring Taiwanese lenders, but have been driven away by the limited growth in a mature market, even though the amounts they may have paid for a non-controlling stake in Chinese banks may be sufficient to obtain management of local banks, Yeh said.
Foreign investors have been racing to purchase or collaborate with Chinese banks in order to strengthen their footholds in the fast-growing economy before the full opening-up of the country's finance market for foreign participation by the end of next year.
There have been several deals recently. The Industrial & Commercial Bank of China, China's biggest bank, announced last Friday that it had joined with Deutsche Bank to cooperate on investment banking services, while BNP Paribas last month said it would buy a 19.2 percent stake in the Nanjing City Commercial Bank for approximately US$87 million. Just few days prior to that, the Asian Development Bank announced it was investing US$75 million, or the equivalent of less than a 1 percent stake, in the Bank of China.
Beijing's Bank of China last month sold 1.6 percent of its shares for US$500 million to UBS. In August it sold a 10 percent stake to an alliance formed by the Royal Bank of Scotland, Merrill Lynch and the Li Ka Shing Foundation, for US$3.1 billion, as well as another 10 percent stake to Temasek Holdings for US$3.1 billion.
While China's banking reforms have made some progress over the past two years, Moody's Investor Serice said last week that Beijing needs to extend this beyond just initial public offerings.
"The state banks need to be transformed into competitive commercial entities which requires much more than just fixing the balance sheets through recapitalization and IPOs," the international ratings agency said in a statement.
In Taiwan, the government is moving to show its determination to continue with banking reform. Last week Premier Frank Hsieh (謝長廷) said the Cabinet plans to sell 20 percent to 30 percent of the government's holdings in the Bank of Taiwan (台灣銀行) to international banks.
"Since overseas investors have diverted their attention to China, local lenders may not be appealing enough to gain strategic investment if they remain stuck ... under restrictions [on expansion across the Taiwan Strait]," said Karl Tseng (曾志峰), a fund manager who manages funds worth NT$830 million at HSBC Investments (Taiwan) Ltd.
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last
RECORD-BREAKING: TSMC’s net profit last quarter beat market expectations by expanding 8.9% and it was the best first-quarter profit in the chipmaker’s history Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which counts Nvidia Corp as a key customer, yesterday said that artificial intelligence (AI) server chip revenue is set to more than double this year from last year amid rising demand. The chipmaker expects the growth momentum to continue in the next five years with an annual compound growth rate of 50 percent, TSMC chief executive officer C.C. Wei (魏哲家) told investors yesterday. By 2028, AI chips’ contribution to revenue would climb to about 20 percent from a percentage in the low teens, Wei said. “Almost all the AI innovators are working with TSMC to address the