Former Mega Financial Holding Co (兆豐金控) chairman Mckinney Tsai (蔡友才) yesterday resigned from Cathay Financial Holding Co’s (國泰金控) board of directors, citing personal reasons, Cathay Financial said in a filing with the Taiwan Stock Exchange.
“Tsai tendered his resignation voluntarily to avoid further complications in light of recent upheavals,” Cathay Financial president Lee Chang-ken (李長庚) told an investors’ conference in Taipei.
“While Tsai’s track record at Mega Financial is widely known across the sector, no one could have foreseen the current circumstances,” Lee said, referring to the US$180 million fine a US regulator imposed on Mega Financial for breaching rules against money laundering.
“We do not regret his appointment to the board,” Lee said.
The Asia-Pacific Group on Money Laundering (APG), of which Taiwan is a member, is to host a round of mutual evaluations in 2018, Lee said.
Given the company’s large presence in international markets, Cathay Financial’s banking subsidiaries will likely be selected to participate, Lee said, adding that the company has begun preparing for the evaluation.
“I cannot guarantee that the company will pass with flying colors,” Lee said, adding that building expertise on money-laundering controls takes time and experience.
“We have been gleaning insights from foreign banks and consulting firms,” Lee said.
He said that legal compliance and money-laundering control standards will only increase in the future, adding that Mega Financial’s woes have sent a stark warning across the sector.
Lee said the the company’s flagship subsidiary, Cathay Life Insurance Co (國泰人壽) ran into regulatory troubles earlier this year in the Philippines.
The insurer, which holds a 21.93 percent stake in Philippine lender Rizal Commercial Banking Corp, was fined 1 billion Philippine pesos (US$21.55 million) by the nation’s central bank, also for violating rules against money laundering.
The fines would be paid in two 500 million peso annual installments over two years, Lee said, adding that the company’s Philippine investment would still yield a 10 percent annual growth in profits after paying the fine.
Cathay Financial reported that net income in the first half fell 65 percent annually to NT$14.2 billion (US$447.9 million), due to a lack of nonrecurring profits during the period. Earnings per share were NT$1.11.
While total lending grew 13 percent annually to NT$1.28 trillion, net interest margins declined to 1.05 percent, the lowest in recent years following successive interest-rate cuts by the central bank.
Profit contributions from overseas branches rose by 9 percent year-on-year, amounting to 42.7 percent of combined earnings, it said.
The company said dividend income in the first seven months totaled NT$14.3 billion.
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