Cathay Financial Holding Co (國泰金控) plans to increase its capital by NT$50 billion (US$16.45 million) this year to fund an overseas buyout, as part of its aim to grow into a regional player, president Lee Chang-ken (李長庚) said yesterday.
“The company’s board has approved the plan so we can have the cash ready when acquisition opportunities arise,” Lee told an investors’ conference in Taipei.
Topping peers in terms of assets and regional exposure, Cathay Financial has drawn plans to lift its stature in Greater China and Southeast Asia.
“We prefer acquisition targets with controlling stakes, but such opportunities are hard to find in China,” Lee said.
Cathay United Bank (國泰世華銀行) is seeking to set up a branch in Shenzhen, China, after owning one in Shanghai, with the outlets in its free-trade zone and in Qingdao slated to open later this year, Lee said.
The bank also plans to establish a subsidiary in China, allowing it to tap the massive retail banking market there, he said.
In Southeast Asia, the lender has 36 outlets in Vietnam, 16 in Cambodia, and one each in Singapore and Malaysia. Lee said the bank is seeking entry to Indonesia, Myanmar and Laos.
Cathay Financial would increase stakes in its asset management unit, CCAM, a joint venture with Conning Holdings Corp of the US, if any shareholders intend to pull out, Lee said.
“We aim to make asset management the group’s key earnings driver, along with the life insurance and banking units,” Lee said.
While not against increases in business taxes, Lee called on policymakers to reconsider the base for business levies on banks and insurance companies.
Firms in the manufacturing sectors can take out costs from taxable income and banks should be allowed to do the same, Lee said.
The proposed tax increase, from the current 2 percent to 5 percent, would weaken the group’s earnings by NT$1.47 billion a year.
The banking arm would bear the brunt of the tax burden with NT$780 million and the life and non-life insurance units would shoulder the remaining NT$690 million tax bill, Lee said.
Lee said he is pressing for an extension of the free economic pilot zones to incentivize foreign clients to high net-worth investors at home to help groom Taiwan’s financial industry.
Financial institutions in Singapore and Hong Kong are hiring staffers to sell products to Taiwan, thanks to looser regulations at offshore banking and securities units, Lee said.
“The opening basically allows the offshore units to earn commissions from sales of foreign financial products rather than design or develop products on their own, which is a shame in my view,” Lee said.
Cathay Financial shares closed up 0.91 percent to NT$44.35 yesterday, stronger than the TAIEX’s 0.37 percent gain, Taiwan Stock Exchange data showed.