ABN-AMRO Bank (
"The mortgage market is becoming very competitive and from a financial point of view it doesn't make much sense anymore to do this business," said Paul Scholten, ABN's country manager.
The decision would not affect its existing mortgage loans, and ABN would continue to service existing home loan customers to whom the bank has extended NT$18 billion, the manager said.
Scholten gave no definitive indication as to when the bank might resume this service, saying only that the "market dynamics" would have to return profitability to mortgage loans before rekindling ABN's interest.
Greater competition has come from a shift in money from corporate loans -- where growth has slowed -- to mortgages, said Scholten, adding that government lending schemes had also impacted the market.
Scholten stressed that the decision to pull out of mortgage loans was not made based on a negative view of the Taiwanese market adding that in fact ABN is planning to expand its operations here.
"This decision ... was purely based on the economics of a specific market segment," said Scholten, adding that while margins are small, the quality of Taiwan's mortgage loans is very good and the non-performing ratio was "very low." The few foreign banks that offer mortgage loans in Taiwan have struggled to compete for a product that requires a strong local branch network, which most foreign institutions do not have.
"Mortage loans is a product for banks that have a large number of branches with a lot of funding ... we are not in that position," Scholten said.
But another foreign lender, HSBC (
HSBC country manager Stuart Davis told the Taipei Times that "Consumer wealth management is a very important strategy for us both globally as well as here in Taiwan and therefore the mortgage product becomes one of the key products in helping us push that strategy forward." And while margins have dropped, Davis said that HSBC, which has NT$22 billion in outstanding mortgage loans in Taiwan, competes not on price but on consistency.
"Our strategy is not to be the cheapest in the market our strategy is really to differentiate ourselves on the basis of consistent customer service and customer pricing," Davis said. He was upbeat about the future of HSBC's mortgage loans in Taiwan.
"We've set ourselves some quite strong growth plans on the mortgage side next year because we see it as a key product in our wealth management strategy," he said, adding that the company would seek next year to establish mini branches around Taiwan.
Mortgage loans aside, ABN is planning to expand its business ABN with 15 mini branches slated for sometime within the next four years and further inroads are planned also for the credit card and retail banking sector.
ABN has already gone a good way to consolidating its position in Taiwan by buying Bank of America's (美國銀行) Taiwan retail business last year and the US$150-million acquisition of Kwang Hwa Investment Trust Co (光華投信) in July this year.
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