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Cosmos seeks to make comeback on cash-card market

Cosmos Bank (萬泰銀行), the nation's cash-card banking leader, is attempting to make a comeback in the battered business by fine-tuning services and adding new functions to its popular "George & Mary" card.

"We have established a new partnership with GE [Money] and SAC [Private Capital Group], restructured our finances and strengthened our risk management capabilities. It is time for a new start," said Qian Lee Hua (華倩), senior vice president in charge of the consumer banking and cash-card business.

Hua said that by offering clients competitive rates between 8.25 and 18.25 percent, depending on their credit rating, Cosmos hopes to see more frequent use of its cash cards by existing clients with sound credit records. It is a radical move from the "one rate serves all" business model used by local banks, Hua said.

Meanwhile, in a bid to win new customers, the bank is offering a 3.65 percent interest rate during the first 70 days of a loan. The preferential rate will expire on March 31.

Hua said new card functions, such as debit, were being looked into.

"We hope our restructured cash-card business will contribute to our overall revenues at a level seen in the bank's heyday," Hua said.

At its peak, Cosmos' cash-card business contributes 45 percent of its revenue.

The defaulting crisis of 2005 to 2006 had a severe impact on local banks. Cosmos Bank registered a net loss of NT$11.3 billion (US$348.3 million) in 2006, while its losses as of the third quarter last year totaled NT$8.9 billion.

Cosmos Bank received an injection of US$900 million from SAC Private Capital Group and GE Money last month.

Under the terms of the assistance package, SAC secured a 58.5 percent stake in Cosmos for US$650 million while GE Money gained a 23.2 percent stake after injecting US$250 million into the cash-strapped bank, a bank statement said.

The overdue lending rate of Cosmos last month stood at 3.8 percent, a significant decline from the 4.29 percent in November.
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