Mon, Oct 08, 2012 - Page 14 News List

INTERVIEW: Shin Kong Bank chairman eyes expansion, profits

Shin Kong Commercial Bank, the banking subsidiary of Shin Kong Financial Holding Co, is gaining a greater role in the life insurance-centric financial service provider, after benefitting from stable income in recent years. Bank chairman Lee Tseng-chang shared the company’s development plans and his thoughts on currency clearing deals with China with “Taipei Times” staff reporter Crystal Hsu during an interview in Yunlin County on Friday

Taipei Times (TT): The government is searching for measures to boost the financial sector. What regulatory easing do you consider the most effective and urgent toward that end?

Lee Tseng-chang (李增昌): The plan to set up a financial platform across the Taiwan Strait is a good idea as it would give financial institutions easier access to markets on either side and better meet customers’ needs.

I hope the government will ditch the requirement for domestic lenders to set up branches in the Organisation of Economic Co-operation and Development [OECD] countries before seeking permission for expansion in China.

The requirement, imposed unilaterally by Taiwan, aims to ensure banks have know-how and accountability for cross-strait operations. I believe our branch in Hong Kong meets their criteria.

The debt-ridden countries are all OECD members, but see how they fare today. We conveyed the wish earlier in a meeting with financial regulators and they appeared receptive to the liberalization. It would allow Shin Kong Bank (新光銀行) to expand faster in China.

We already own a capital leasing firm in Suzhou, China, and would like to open a banking branch in the city or Shanghai as the first step in our effort to tap into China’s banking market.

Meanwhile, I think the government should demonstrate more activism and efficiency in follow-up talks over the Economic Cooperation Framework Agreement [ECFA] with China, though I understand it has to be cautious in dealing with the issue.

TT: Do you plan to expand in other countries other than China as the Financial Supervisory Commission (FSC) encourages banks to do in order to diversify risks?

Lee: Sure. We plan to file applications later this year to upgrade our representative office in Vietnam now that our asset size has grown to more than the US$20 billion required. We are also mulling branches in Cambodia, Myanmar and Singapore.

At home, I think Shin Kong bank is large enough judging from the size of our outlet network. We have 106 branches nationwide with 50 located in the Greater Taipei area.

Other financial firms did approach us for merger and acquisition talks, but I stand by the view that expansions aimed at enlarging the sales channel are not necessary. I cannot provide details about who approached us.

TT: Do any customers express a desire to divide time deposit accounts in order to avoid extra payments, given proposals to shore up the national health insurance program by taxing interest income higher than NT$5,000 per savings account?

Lee: Most convey the wish to avoid heavier tax burdens. If adopted, the policy will increase our operational costs as we will have to spend more time and energy to divide savings accounts.

It would be better if policymakers could find other sources to finance the program. Or they could raise the threshold so fewer people would be affected and the resistance would be smaller. Time savings generate little interest income these days due to the low interest rate environment.

We will toe the line once the government finalizes the issue. The public would be more receptive to the policy change if only the wealthy have to shoulder heavier burdens. In my view, NT$10,000 would be a more reasonable threshold.

TT: Major state-run banks have raised interest rates on mortgage loans to help cool down the property market. Will Shin Kong Bank follow suit?

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