State-run Taiwan Cooperative Financial Holding Co (合庫金控) aims to increase its capital adequacy and financial proficiency, allowing the bank-focused conglomerate more room to expand overseas and boost earnings, newly installed chairman Liao Tsan-chang (廖燦昌) said yesterday.
Liao made the statements after taking over the helm of Taiwan Cooperative Financial from his predecessor, Leon Shen (沈臨龍). Liao resigned earlier the same day from his chairmanship at state-run Taiwan Business Bank (台灣企銀).
“Taiwan Cooperative Financial owns assets of NT$3 trillion [US$99.87 billion], three times those of Taiwan Business Bank, suggesting greater stress and responsibility in the new position,” Liao said.
Liao, who has served in different positions for the past 33 years at Taiwan Business Bank, said he is seeking first to raise the capital adequacy ratio of Taiwan Cooperative to 8 percent from the current 7.5 percent, so the holding company can meet requirements for overseas expansion.
State-run financial institutions are vying to grow into top-tier regional players in line with the Financial Supervisory Commission’s call for one or two regional champions in three years.
State-run peers like Mega Financial Holding Co (兆豐金控) and First Financial Holding Co (第一金) are reportedly preparing to submit assessment reports on how they may carry out the suggested consolidation.
Mega Financial and First Financial reportedly cite Taiwan Cooperative as their second-best option for consolidation, though neither is eager about mergers among state-run peers due to a lack of ancillary benefits, local media said.
The merger of state-run financial institutions with private peers is unlikely, since none is willing to exit the market.
Taiwan Cooperative plans to set up new banking branches in the Chinese cities of Tianjin and Fuzhou later this year to increase overseas earnings, Liao said, as borrowing costs are higher in China and more favorable for profit increases.
The main subsidiary, Taiwan Cooperative Bank (合庫銀行), is to open two sub-branches in Cambodia and is waiting for approval to establish a branch in New York and a representative office in Myanmar.
The lender, which ranks the largest among local peers by the number of branches and second place by loan books of NT$1.9 trillion, can improve in terms of risk control, cash management, cross-selling efficiency and personnel education, Liao said.
Liao named former government statistics and treasury official Lin Shih-lung (林士郎) as president.
Taiwan Cooperative Financial is under pressure to turn profits this year due to provision costs of about NT$5 billion to meet the statutory requirement by the end of this year.
Taiwan Cooperative Financial shares ended flat at NT$16.75 yesterday, stronger than the TAIEX’s 0.49 percent drop, Taiwan Stock Exchange data showed.