Local financial holding groups face increased competition from their multinational counterparts as the world's four major banking conglomerates have expanded their networks through acquisitions, market analysts said on Saturday.
The warning came after HSBC Holdings PLC (匯豐銀行), Europe's largest bank by market value, took over control of debt-laden The Chinese Bank (中華商銀) on Friday after the government agreed to pay NT$47.49 billion (US$1.46 billion) for HSBC to take it off its hands.
The HSBC deal was the latest in a series of forays by multinational banks into the local market. On June 8, ABN Amro Holding NV (荷蘭銀行) assumed control of Taitung Business Bank (台東企銀) while New York-based Citigroup Inc (花旗銀行), the nation's most profitable overseas bank, bought the Bank of Overseas Chinese (華僑銀行) for NT$14.1 billion in April. In September last year, London-based Standard Chartered PLC (渣打銀行) acquired Hsinchu International Bank (新竹商銀).
Market analysts said multinational banking groups had one eye on the Chinese market when making their acquisitions in Taiwan. Given that Taiwan and China share the same language and cultural background, multinational banks would be able to use the experience they obtain here and build on it when they enter the Chinese market, analysts said.
Moreover, the Taiwanese acquisitions offer easy access to the market for financial services for the large number of Taiwan-funded companies doing business in China and other Asian countries.
In addition, the analysts said, the local consumer banking and personal financial management markets are also showing steady growth. With a limited number of branches, multinational banks previously found it difficult to get a foothold in these emerging sectors.
Following the acquisitions, multinational banks are expanding their local service networks and the return of their investment would become evident in two to three years' time, the analysts said.
Local financial holding company executives say that the arrival of competition from overseas has posed a new threat to their market shares.
"If we fail to improve our service quality and design more innovative financial products, we could be overtaken by our multinational counterparts within three years," said a senior executive of a local financial holding company who preferred to remain anonymous.
The multinationals would offer attractive employment terms in order to lure outstanding financial managers away from local banks, posing yet another challenge to the local banks, the executive said.
In the face of this growing competition, the executive said local banks must step up their staff training, streamline their operations, improve their product design capabilities and seek merger and acquisition opportunities with local counterparts to expand their economies of scale. An ideal number of domestic branches of a financial holding group would be between 180 and 200, the executive said.
The deal reached between HSBC and the government-owned Central Deposit Insurance Corp (CDIC) on Friday means that HSBC will take over The Chinese Bank's assets, including its branches, its debts and at least half of the bank's employees, while Taiwan's Financial Reconstruction Fund will pay HSBC NT$47.49 billion.
The Chinese Bank was a subsidiary of the bankrupt Rebar Group (力霸集團). The CDIC assumed control of the bank after a run on its deposits early this year.
HSBC said in a statement on Friday that it plans to inject between US$300 million and US$400 million of fresh capital into The Chinese Bank.
"The Chinese Bank will provide HSBC in Taiwan with significant opportunities in retail, commercial and corporate banking," HSBC's Taiwan chief executive Alistair Currie said in the statement.
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
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
FUTURE PLANS: Although the electric vehicle market is getting more competitive, Hon Hai would stick to its goal of seizing a 5 percent share globally, Young Liu said Hon Hai Precision Industry Co (鴻海精密), a major iPhone assembler and supplier of artificial intelligence (AI) servers powered by Nvidia Corp’s chips, yesterday said it has introduced a rotating chief executive structure as part of the company’s efforts to cultivate future leaders and to enhance corporate governance. The 50-year-old contract electronics maker reported sizable revenue of NT$6.16 trillion (US$189.67 billion) last year. Hon Hai, also known as Foxconn Technology Group (富士康科技集團), has been under the control of one man almost since its inception. A rotating CEO system is a rarity among Taiwanese businesses. Hon Hai has given leaders of the company’s six