Chinatrust Financial Holding Co (中信金控) is interested in tapping Japan’s banking market, which offers huge potential for selling pension and wealth management products given its aging population and high savings, president Daniel Wu (吳一揆) said yesterday.
Japanese banks have voiced interest in striking a partnership with Chinatrust Financial to deepen penetration in their home market and China after Taiwan and Japan inked an investment protection pact in September 2011, Wu told an investors’ conference.
Wu’s comments came as Chinatrust Financial is reportedly preparing to acquire Tokyo Star Bank next month, allowing the Taiwanese company to boost retail banking business in the world’s third-largest economy.
“The infiltration rate of wealth management products in Japan hovers at about 5 percent, compared with 15 percent in Taiwan,” Wu said.
The figure suggests ample room for growth, aided by Japan’s high bank savings deposits despite ultra-low interest rates, he said.
Japan’s aging population bodes well for pension products. According to Chinatrust, 60 percent of customers with Japan’s four largest banks are willing to switch to smaller local banks because the former fail to meet their needs.
While Japanese Prime Minister Shinzo Abe’s aggressive economic reform measures are favorable to its business expansion in Japan, Chinatrust Financial has no plan to rush the deal because of a weakening yen.
“All acquisitions must be able to generate 15 percent return on equity,” Wu said, refusing to say whether Tokyo Star meets this requirement.
Chinatrust Financial is also eying acquisition opportunities in China and Southeast Asia to take advantage of the fast GDP growth in those areas in recent years, Wu said.
Lenders in Southeast Asia are relatively expensive with price-to-book ratios ranging from two-and-half to three times, Wu said.
In addition, Chinatrust Financial is in talks with Canadian firm Manulife Financial Corp to buy its Taiwanese unit, Manulife Insurance Co (宏利人壽), as the operational environment grows increasingly difficult for foreign players.
The company, which bought MetLife Inc’s local unit for US$180 million in 2011, is financially well-positioned to integrate Manulife given its modest assets — sized at NT$30 billion (US$1 billion) — and has more appetite for expansion if opportunities arise, Wu said, declining to comment on reports that the group is to close the deal for Manulife next month.
Chinatrust Financial has a capital adequacy ratio of 165.5 percent and a double leverage ratio of 90 percent after successfully raising NT$20 billion in new capital through private placement deals last month, company data showed.
Shares in Chinatrust Financial closed up 0.27 percent to NT$18.25 yesterday, bucking the TAIEX’s 0.39 percent drop, Taiwan Stock Exchange data indicated.