Taiwan Cooperative Bank (合作金庫銀行) chairman Liu Teng-cheng (劉燈城) said yesterday he was confident the state-run lender would remain profitable and competitive following the entry of Chinese banks in the local market.
“We welcome competition from across the Strait and we believe it will not affect Taiwan Cooperative Bank’s profitability,” Liu said on the sidelines of a ground-breaking ceremony for the bank’s new headquarters in Taipei.
Taiwanese banks have proved competitive and proficient as they have managed to increase profits this year despite low net interest margins of 1 to 2 percent, compared with 3 percent in China, Liu said.
On Thursday, the Financial Supervisory Commission granted approval to Bank of China (中國銀行) and Bank of Communications (交通銀行) to set up representative offices in Taiwan.
While the two Chinese lenders can only conduct commercial data research and other non-profit making activities as representative offices, they may apply to upgrade to a branch after a year. The upgrade would allow the Chinese banks to conduct local currency operations.
Liu, whose bank last week won approval from China to set up a branch in Suzhou, Jiangsu Province, said he expected Chinese lenders to attract Chinese businesspeople in Taiwan, whereas Taiwanese customers would prefer to do business with local banks.
“That appeal will render their impact on the local banking industry very limited,” Liu said.
Liu said Taiwan Cooperative Bank’s Suzhou branch may start operations by the end of the year and aims to prove profitable next year in order to qualify to operate business in yuan in 2012, as per the Chinese banking regulator’s requirements.
The state-run lender plans to move into its new headquarters in 2014 as part of an attempt to better utilize its real estate properties. The new complex covers 15,207m² and will house three buildings with a total of 105,785m² of floor space, the lender said in a statement.
The bank purchased the plot of land on the intersection of Changan E Road and Bade Road for NT$8.2 billion (US$259.33 million) in 1991, a value that is believed to have increased by at least 50 percent.
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