The Canadian Imperial Bank of Commerce (CIBC,
This is the third foreign bank that has decided to suspend its Taiwan operations so far this year. Royal Bank of Canada (
According to the ministry, over 40 percent of foreign banks in Taiwan lost money in the first three quarters this year. The MOF says 18 foreign banks with operations in Taiwan incurred pre-tax losses in the first three quarters of 1999.
CIBC has in part decided to withdraw from Taiwan because Canadian banks have changed their operating strategy since the Asian financial crisis. They will now generally concentrate their efforts on business near their headquarters instead of focusing on overseas branches, a senior ministry official said.
Another reason is for the withdrawals is that foreign banks not only have to compete with other foreign banks in Taiwan, they also have to compete with domestic banks. The excessive competition in Taiwan's banking market has hurt profitability in this sector, the official said.
There are a total of 95 banks -- 52 domestic and 43 foreign -- currently operating in Taiwan.
CIBC's Taiwan operation lost NT$254 million in the first three quarters. It also lost NT$67 million last year and it made NT$11 million in 1997. It has lost a total of NT$310 million (about US$10 million) since 1997.
According to the MOF, 18 foreign banks generated losses in the first three quarters; this was three more banks than at the end of first half. Twelve foreign banks lost money in 1998, and nine in 1997.
A ministry official said the loss in profitability among foreign banks in Taiwan also involves bank loans that were extended to listed companies with financial difficulties, the so-called "land mine shares" (
National Australia Bank, Ltd (
A number of foreign banks in Taiwan have not been able to turn a profit in the last several years.
Five foreign banks have entered the Taiwan market since April 1997. Four of them have lost money so far this year, including Sanwa Bank (
行). The losses have ranged between NT$1 million to NT$25 million.
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