Search the results Chinatrust has avoided head-on competition with its big rivals, carving an onshore niche and offering genuine open architecture
Unlike most of its main domestic competitors, Chinatrust’s wealth management business features strongly in Euromoney’s 2006 private banking poll in Taiwan, scoring third overall, behind big global banks Citigroup and UBS. The good showing, says Steve Chou, president of Chinatrust’s retail banking group, is evidence that the bank’s strategy of steering away from the larger competition is working.
Right from the start
“We chose the right business model from the beginning,” says Chou. “We were very pragmatic and played to our strengths.”
Those strengths, says Chou, are the bank’s strong domestic brand equity, a good sales and service culture and the “open architecture” that all private banks are so fond of. Unlike many of its competitors in Taiwan, however, Chinatrust has a reasonable claim on the term. “We decided to be open from the beginning,” says Chou. “We don’t own any agency company or asset manager. Our securities arm is very small. We just take deposits.”
Chinatrust seeks Taiwan’s middle ground in private banking: those clients with liquid assets of between US$300,000 and US$1.5 million. In line with its low-key offering, Chinatrust does not provide the advisory mandates that many global banks seek. Rather, it concentrates on what Chou refers to as diagnostic and consultative services for its local client base.
“We’re choosing a segment where we can win business,” he says. “Where we can compete against global banks. We decided not to go into advisory: the market’s not mature enough. Our clients are more deposit-driven. They prefer to have 75% of their assets in liquid deposits.”
The bank’s wealth management services are all onshore and will remain that way says Chou, despite a growing demand for offshore services.
“It’s [offshore banking] getting more important, especially in the higher segment,” he says. “All the global names are competing in this segment. We have limited appetite for offshore advisory. We can’t compete.”
While the large private banks fight over Taiwan’s offshore market, Chinatrust is clearly doing very nicely in its own niche onshore. According to Chou, profits from the division have grown strongly over the past five years and there is more to come.
“The local segment still has a lot of growth left,” says Chou. “Last year was 26% up in terms of profits. We expect the next three years to grow at 20% per annum and perhaps 15% to18% each year after that. So we’re focusing on the onshore market to make sure we fully leverage that.”
