Taiwan Financial Holding Co (台灣金控), the nation’s largest state-owned financial services provider, aims to accelerate its expansion overseas and set up insurance brokerage and asset management units to boost overall efficiency, newly installed chairman Liu Teng-cheng (劉燈城) said yesterday.
Liu added the firm’s banking arm — the Bank of Taiwan (台灣銀行) — is set to supply cross-strait currency settlement services once China and Taiwan agree such a mechanism.
“Taiwan Financial will continue efforts to strengthen its economies of scale,” Liu said. “Toward that end, we plan to create insurance brokerage and asset management units to lift the group’s presence abroad.”
Liu made the statement upon succeeding Susan Chang (張秀蓮), who is retiring as Taiwan Financial chairwoman.
Together, state-run lenders take up more than 50 percent of the domestic banking’s market share, but are often criticized for lacking efficiency, Liu said.
Public confidence in the solvency of state banks has resulted in false complacency among lenders and impeded their structural reforms, Fitch Ratings said last month.
A lack of innovation and competitiveness in products and services characterizes Bank of Taiwan (台灣銀行), Mega International Commercial Bank (兆豐國際商銀), Land Bank of Taiwan (土地銀行), Taiwan Cooperative Bank (合作金庫銀行), Hua Nan Commercial Bank (華南銀行), First Commercial Bank (第一銀行), Chang Hwa Commercial Bank (彰化銀行) and Taiwan Business Bank (台灣企銀) — in which the government holds significant stakes, Fitch said.
However, more efficient, private lenders tend to be wanting in terms of discipline, Liu said.
“I aim to make Taiwan Financial an efficient and well-disciplined financial service provider,” he said. “It is not good enough to play safe. The group should endeavor to boost earnings.”
Bank of Taiwan, the principal subsidiary and source of income, is equipped to provide yuan settlement services once the central bank and its Chinese counterpart work out settlement rules, Liu said.
The lender plans to open representative offices in India and Australia after setting up a branch in Shanghai, China, last week to boost its stature in the region, Liu said.
Mega Bank, the banking unit of Mega Financial Holding Co (兆豐金控), is also eyeing the currency settlement market.
Meanwhile, Taiwan Cooperative Financial Holding Co (合作金控) has appointed Leon Shen (沈臨龍) to fill the vacancy left by Liu when he moved to Taiwan Financial. Shen had served different positions under the Ministry of Finance.
Shen said his first challenge was to raise NT$18 billion (US$599.7 million) in new funds later this year to boost the group’s capital adequacy.
Taiwan Cooperative Bank, the group’s banking unit, was rated the most vulnerable to external shocks among state-run banks as its core capital ratio would fall to 4.6 percent, below international required levels of 6.5 percent, Fitch said.
The lender will focus on improving interest margin after expanding its loan book to a sizable amount, Shen said.