Cathay Financial Holding Co (
Cathay Financial is the nation's biggest financial-services provider with NT$2.65 trillion in assets.
"As we used to focus on how to utilize abundant cash at hand, we would be inclined to enter the securitization [business] in the last two years," Cathay Financial's chief strategic officer Lee Chang-ken (
Lee said the issuance of securitization products creates a win-win situation for Cathay Financial, as the company's insurance unit can double as an issuer and investor, while its securities subsidiary can act as the underwriter. In addition, investing in securitization will also help add leverage to the company's expertise in real-estate management, he said.
Cathay Financial comprises Cathay Life Insurance Corp (國泰人壽), Cathay Century Insurance Co (國泰世紀產險), Cathay United Bank (國泰世華銀行), Cathay Securities Co (國泰證券) and Cathay Securities Investment Trust Co (國泰投信).
The firm yesterday listed its assets likely to be subject to securitization, including over NT$100 billion in real estate, more than NT$450 billion in home loans, over NT$60 billion incredit-card lending and over NT$600 billion in investments in domestic and overseas bonds.
"We expect to issue one batch of REITs [real estate investment trusts] worth over NT$10 billion ? as soon as possible this year after getting approval from our board," Lee said.
Cathay Financial -- experts in office property management -- tends to choose non-office buildings located in developing business districts as targets for REITs, Lee said, giving an example of buildings they own in Taipei's Ximending district that can be developed as shopping malls targeting teenage consumers.
Cathay Financial yesterday posted first-quarter, after-tax income of NT$4.79 billion, a huge drop from NT$12.04 billion a year ago.
The company attributed the decline to a huge drop of NT$4.4 billion in capital gains from stock investments, an unexpected increase in hedging costs and foreign exchange losses of NT$2.6 billion, as well as a NT$670 million write-down in revalued assets under the new accounting rules.
"Cathay Financial's flagship life-insurance arm indeed did not perform well ? with the nation's sliding stock market mainly to blame," said Chu Yu-chun (
The financial services giant places its only hope on the issuance of REITs to generate funds if the stock market does not rebound considerably in the following quarters, she said.
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