The recent riots in Vietnam have led SinoPac Financial Holdings Co (永豐金) to slow its expansion in Southeast Asia on concerns over legal risks that seem to be a regional issue rather than an isolated incident, company spokesman Michael Chang (張晉源) said yesterday.
“We will proceed with existing investment in Vietnam, but will put a hold on further expansions in ASEAN markets as legal risks also weigh on Indonesia, Thailand and India,” Chang told reporters before an investors’ conference in Taipei.
The conglomerate is waiting for regulatory approval in Taiwan and Vietnam to allow its main subsidiary, Bank SinoPac (永豐銀行), to take over assets and business from Far East National Bank (遠東國民銀行), another subsidiary, so it can build operations in the emerging but fast-growing Vietnamese economy.
SinoPac Financial now favors a conservative expansion approach revolving around capital leasing, which does not require the immediate establishment of offices, making the group less vulnerable to violent protests abroad, Chang said.
About 1,100 Taiwanese firms in Vietnam reportedly stopped operations as rioters broke into and set fire to their factories in protests over Beijing’s installation of an oil rig close to the Paracel Islands (Xisha Islands, 西沙群島) in the South China Sea — claimed by Taiwan, China and Vietnam.
The unrest may take a heavy toll on Taiwan’s major non-life insurance companies, as all foreign investments in Vietnam must now buy fire, strike and riot insurance.
Unlike banks that serve customers across sectors, capital leasing limits cooperation with firms in a specific industry, Chang said, adding that SinoPac Financial could settle with the limit in favor of quick entrance and exit. The bank-focused group previously considered expansions in Cambodia, Myanmar and other regional countries, in line with the Financial Supervisory Commission’s call for risk diversification given the sector’s heavy exposure in China.
The one-year prohibition of sales of risky investment products would weaken the performance of the Treasury market units (TMUs), but may not hurt the group’s overall profitability, Chang said, declining to supply TMUs earnings details.
SinoPac Financial earned NT$2.94 billion (US$97 million) in net profit for the first quarter, rising 19.8 percent from the preceding quarter and 2.5 percent from a year earlier, on the back of improving interest and fee income, company data showed.
“The punishment enables Bank SinoPac to review its wealth management policies so it may better serve customers,” Bank SinoPac president Tina Chiang (江威娜) said.