Size does not necessarily matter, according to foreign banking experts who suggested yesterday that local banks narrow the scope of their business.
"Many Taiwanese banks are within the 80 percent of banks in the Asian region that have no idea of what their customers really need," Greg Gibb, managing partner of McKinsey & Co Inc in Taiwan, said at a book-launching ceremony.
The economic environment has been changing fast in Taiwan in recent years, owing to industry migration, the emergence of financial holding companies and a wave of consolidation among local banks, Gibb said.
However, few banks are capable of adjusting their business strategies to capitalize on new opportunities amid the volatile environment, he said.
Fourteen financial holding companies have been established since 2001. But Gibb said those companies generated little value due to limited synergy, which may result in a wave of breakups among them in the next two or three years.
Bank mergers are needed in such a saturated market, he said, but it is the scale, not the business scope that should be expanded.
"Many local banks are seeking to become universal banks, but this model has failed in most cases," Gibb said. "They should find out what they are good at and focus on their core businesses that will create more profits instead of volume."
The banks should modify their structures in accordance with their customers' needs, not functions, Gibb suggested. For example, the needs of large enterprises are different from those of small- and medium-sized companies, but banks appear to be hardly aware of this point and have failed to come up with proper solutions for various customers, Gibb said.
Gibb also suggested that banks collaboratively capitalize on a large number of small- and medium-sized firms, which account for 98 percent of the nation's enterprises, by sharing portfolios that can be indicators of the companies' credit status.
Taiwan has not yet developed a mechanism to evaluate the credit of small and medium-scale companies, which makes it difficult for such firms to get bank loans.
As for banks that are eying the lucrative Chinese market, Gibb encouraged them to enhance their specialties and develop an exceptional business in order to make themselves distinct from Chinese banks and the more than 200 foreign banks now in the market.
Christian Raubach, a principal of McKinsey, urged local banks to take practical actions to make reform happen, saying that South Korea's banking industry, which lagged far behind its Taiwanese counterpart in 1995, has now surpassed it because the banking sector here is reluctant to move forward.
Shares of contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) came under pressure yesterday after a report that Apple Inc is looking to shift some orders from the Taiwanese company to Intel Corp. TSMC shares fell NT$55, or 2.4 percent, to close at NT$2,235 on the local main board, Taiwan Stock Exchange data showed. Despite the losses, TSMC is expected to continue to benefit from sound fundamentals, as it maintains a lead over its peers in high-end process development, analysts said. “The selling was a knee-jerk reaction to an Intel-Apple report over the weekend,” Mega International Investment Services Corp (兆豐國際投顧) analyst Alex Huang
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is expected to remain Apple Inc’s primary chip manufacturing partner despite reports that Apple could shift some orders to Intel Corp, industry experts said yesterday. The comments came after The Wall Street Journal reported on Friday that Apple and Intel had reached a preliminary agreement following more than a year of negotiations for Intel to manufacture some chips for Apple devices. Taiwan Institute of Economic Research (台灣經濟研究院) economist Arisa Liu (劉佩真) said TSMC’s advanced packaging technologies, including integrated fan-out and chip-on-wafer-on-substrate, remain critical to the performance of Apple’s A-series and M-series chips. She said Intel and Samsung
TRANSITION: With the closure, the company would reorganize its Taiwanese unit to a sales and service-focused model, Bridgestone said Bridgestone Corp yesterday announced it would cease manufacturing operations at its tire plant in Hsinchu County’s Hukou Township (湖口), affecting more than 500 workers. Bridgestone Taiwan Co (台灣普利司通) said in a statement that the decision was based on the Tokyo-based tire maker’s adjustments to its global operational strategy and long-term market development considerations. The Taiwanese unit would be reorganized as part of the closure, effective yesterday, and all related production activities would be concluded, the statement said. Under the plan, Bridgestone would continue to deepen its presence in the Taiwanese market, while transitioning to a sales and service-focused business model, it added. The Hsinchu
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has approved a capital budget of US$31.28 billion for production expansion to meet long-term development needs during the artificial intelligence (AI) boom. The company’s board meeting yesterday approved the capital appropriation plan for purposes such as the installation of advanced technology capacity and fab construction, the world’s largest contract chipmaker said in a statement. At an earnings conference last month, TSMC forecast that its capital expenditure for this year would be at the higher end of the US$52 billion to US$56 billion range it forecast in January in response to robust demand for 5G, AI and
RSS