Taiwan Cooperative Financial Holding Co (合作金控) aims to shut at least five bank branches next year as the state-run firm takes steps to strengthen its financial proficiency and ease the nation’s overcrowded banking market, recently installed chairman Leon Shen (沈臨龍) said last week.
Shen, who took the helm of the nation’s fourth largest financial service provider by assets three months ago, said the company plans to downsize its banking network with at least five unprofitable branches in less populated districts to be merged with adjacent ones next year.
Taiwan Cooperative Bank (合作金庫銀行), the banking subsidiary and main source of income, has 296 branches nationwide after integrating with the state-run Farmers Bank (農民銀行) in May 2006.
“The branches are both assets and burdens for the group that will seek to strengthen its operations rather than increase its economies of scale under my stewardship,” Shen said in a public function on Thursday.
The company is still assessing the ideal size for the bank but Shen said 200 branches should suffice, given the overcrowded and fragmented market.
The planned downsizing would not be easy, Shen said, as workers unions are bound to protest and ask lawmakers to intervene.
To remove resistance, the company will keep in payroll intact but encourage early retirement with favorable compensation terms, he said.
With a doctoral degree in economics, Shen, 60, is a former chairman of the state-funded Taiwan Asset Management Co (台灣金聯資產管理) and served in different positions under the Ministry of Finance prior to that.
The bank expanded into a financial holding firm in December last year after teaming up with French banking group BNP Paribas to create an asset management unit in June last year and a life insurance subsidiary in 2010.
BNP Paribas Assurance TCB Life Insurance Co (合作金庫人壽) is endeavoring to break even next year and BNP Paribas TCB Asset Management Co (合庫巴黎證券投資信託) has yet to set a timetable as market volatility challenges earnings, Shen said.
While positive about business opportunities in Chinese yuan, Shen said Taiwan Cooperative Bank is no match for state-run Mega International Commercial Bank (兆豐國際商銀) or First Commercial Bank (第一銀行) in offering yuan-linked products and services. It will instead pursue a balanced growth, Shen said.
Currently, offshore banking operations generate 23 percent of Taiwan Cooperative Bank’s revenue and may contribute 25 percent next year, compared with 45 percent at Mega Bank, he said.
Taiwan Cooperative Financial may achieve profits of NT$9 billion (US$308 million) this year after the lending arm posted NT$591 million in net income for last month, lifting the bank’s total earnings to NT$6.44 billion as of last month, financial analysts said.