SinoPac Financial Holdings Co (永豐金控) said yesterday its banking arm is poised to set up a subsidiary or acquire shares in a Chinese peer once Taiwan and China lift restrictions.
Michael Chang (張晉源), chief strategy officer at SinoPac Financial, said the company will make acquisition and merger moves once the government lays out the official rules regarding cross-strait banking.
“We prefer to set up a subsidiary to a branch,” Chang said. “Owning stakes in a Chinese peer is also an option. It depends on which expansion can better benefit SinoPac structurally.”
Unlike most other domestic lenders, Bank SinoPac (永豐銀行), the group’s banking subsidiary and main source of income, has to date not unveiled plans to expand into China.
Chang said Bank SinoPac has ready cash but would wait until the government gives the go-ahead. He declined to elaborate.
Financial Supervisory Commission Vice Chairwoman Lee Jih-chu (李紀珠) said earlier this week that cross-strait banking rules should be eased further so domestic lenders can better compete against foreign rivals in China.
Currently, Taiwanese banks may opt to expand in China by setting up branches or subsidiaries or by acquiring stakes in Chinese peers.
SinoPac Financial aims to strengthen its franchise, scale of economy and earnings ability in the coming five years, which is critical for the banking industry’s development after the signing of the Economic Cooperation Framework Agreement in June last year.
To that end, SinoPac Financial took part in several recent acquisition bids for domestic securities and financial institutions but considered the asking prices unacceptable, Chang said.
The group has no intention of expanding into the life insurance business because “we are not familiar with the sector at all,” the SinoPac strategy officer said.
SinoPac Financial aims to improve its profitability for the rest of the year after posting NT$1.49 billion (US$51.97 million) in net income for the first quarter, increasing 52 percent on the year-earlier level, the group’s chief financial officer Ted Liao (廖達德) said.
The banking unit contributed NT$1.29 billion, or 86.4 percent, company data showed.
The net interest margin stood at 1.16 percent in the first three months, sliding from 1.19 percent in the preceding quarter, due to sharp market competition, the report said.
The margin inched up in the second quarter and is expected to trend slightly higher if the central bank continues to raise interest rates, Liao said.
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