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Mon, Nov 13, 2006 - Page 11 News List

New era for Taiwan's banks

Celebrating its 60th anniversary this year, state-controlled Taiwan Cooperative Bank's chairman Sean Chen sat down with the Taipei Times' Amber Chung last week to share his master plan for the nation's second-largest bank to further evolve in the future and provide some insights into where all of this could take the country


Sean Chen, chairman of Taiwan Cooperative Bank and former chairman of the Taiwanese Stock Exchange, makes a gesture during an interview with the Taipei Times last week.


Taipei Times: It has long been rumored that BNP Paribas would invest in Taiwan Cooperative Bank (合作金庫銀行). Is this true?

Sean Chen (陳沖): This is media speculation. As a publicly traded company, we cannot comment on that. But we will not give up any opportunity to team up with foreign investors.

This is the way to enhance and open ourselves to the outside world. Cooperation with foreign rivals can bring a great deal of stimulation to our staff members as well as new ways of thinking, like what this product selling alliance with BNP Paribas has caused.

TT: Besides BNP Paribas, any likelihood of or ongoing talks in partnership with other foreign rivals?

Chen: We are open to the possibility of collaborating with other foreign counterparts. We cannot make further comments as exposure could scare the interested parties away. Nevertheless, we prefer foreign partners that enjoy abundant product lines in banking, securities and insurance and who have a track record of friendliness in their past partnerships.

We have to test the waters by starting from product selling before going into close partnership. After all, a prudent approach is crucial, especially in the financial sector.

TT: You made a wish during the 60th anniversary ceremony last month to develop Taiwan Cooperative into a regional player. Can you elaborate on that?

Chen: Taiwan Cooperative was more like a grassroots financial institution in the past, with minimal overseas presence. We plan to focus on Asia-Pacific markets where Taiwanese companies and overseas Taiwanese will gather in the future.

The takeover of Farmers Bank of China (農民銀行) this year added two more spots in the Asia-Pacific area -- Los Angeles and Seattle -- to our original four overseas outlets. In addition, we are planning to upgrade our representative office in Hong Kong to a branch and have been studying the feasibility of entry into the market in Vietnam.

The other key market in our Asia-Pacific layout is Australia, which enjoys a great deal of Taiwanese investment and where many overseas Taiwanese are located.

Thus far Taiwanese branches there have been quite profitable. I have visited the country and talked to its financial regulator earlier this year to pave the way for our future expansion.

Our overseas development plan can be carried out step by step, without any kind of partnership with foreign banks -- after we complete our recapitalization by raising NT$4.4 billion [US$134.4 million] by year's end, which would boost the bank's capital adequacy ratio above 10 percent, a regulatory requirement for overseas expansion. We do have an internal timetable for overseas expansion but the results will depend on financial regulators at home and in host countries.

TT: What is your plan for the Chinese financial market?

Chen: The Chinese market is way beyond the level that a bank can control under current cross-strait relations. But Taiwan Cooperative was the first Taiwanese bank allowed to set up a representative office in Beijing, which we did in 2002.

We have met the two-year requirement and financially qualified to upgrade the office to a branch that can actually conduct business. Still, because governments on both sides have failed to sign a memorandum of understanding, nothing has happened.

As a large-scale and state-controlled bank, we cannot bypass the government's rules to invest in China via a third place /country like what some new, private banks have been trying.

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