Capital Securities Corp (群益證券) plans to expand further after integrating Taiwan International Securities Corp (TISC, 金鼎證券) into its operations this month, but favors a cautious approach in tapping the Chinese market, company executives said last week.
Chou Kang-chi (周康記), president at the nation’s fourth-largest brokerage by market share, said the domestic securities market would see more acquisitions and mergers in the next few years, with the leading firms growing larger until only half of the securities firms remain.
At the end of last month, there were 124 securities firms with 1,016 branches nationwide, according to Financial Supervisory Commission (FSC) statistics.
“Capital Securities will not stay on the sidelines watching the drama unfolding,” Chou said on the sidelines of a public function on Tuesday. “We will keep strengthening our economies of scale and market share.”
Chou made the statement after rival Yuanta Financial Holding Co (元大金控), owner of the nation’s biggest securities brokerage, Yuanta Securities (元大證券), struck a deal last month to acquire Polaris Securities Co (寶來證券) for NT$48.9 billion (US$1.69 billion).
The acquisition, which still requires regulatory approval, will solidify Yuanta Securities’ leadership position, lifting its market share from 11.37 percent to 15.72 percent. Yuanta Financial chairman Yen Ching-chang (顏慶章) said earlier that the group intended to further expand, without elaborating.
The integration of TISC increased Capital Securities’ market share to 5.7 percent, from 4.13 percent with a No. 7 ranking.
Capital Securities aims to expand the market share to 6 percent this year, Chou said, adding that the company does not expect to see synergy benefits until the second half of next year.
“It will take a while to integrate two companies with a roughly equal number of outlets, but -separate accounting and operating systems,” Chou said.
Prior to the integration, Capital Securities had 39 branch offices while TISC had 30.
Chou declined to say if Capital Securities was in talks over potential acquisitions or mergers. The integration of TISC came after Capital Securities acquired EnTie Securities Finance Co (安泰證金) in September 2009.
Capital Securities last month signed a memorandum of cooperation with China’s Shenyin & Wanguo Securities Co (申銀萬國證券), paving the way for expansion there, as the agreement covers strategic cooperation in brokerage, staff training and acquisitions and mergers. Capital Securities set up an office in Shanghai in 1997.
Capital Securities executive vice president Tony Tan (譚得誠) said the company would like to acquire shares in a Chinese peer or set up branches there, but aggressive investments were unlikely given China’s current restrictions.
“We would take a cautious approach before China lifts the ban on brokering and dealing A shares,” Tan said, referring to shares traded in Chinese yuan on the Shanghai and Shenzhen stock exchanges.