Taiwan: The dilemmas of nationalism

In March, Taiwan’s voters will go to the polls, and as ever the issue of cross-strait relations with mainland China will be key. And few groups will have more at stake than Taiwan’s banking sector.

Taiwanese banks face plenty of headwinds: a severely overbanked market, with 38 institutions even after a recent round of consolidation; the increasing threat from international players, with Standard Chartered, Citi and ABN Amro all having acquired local banks in the past 12 months; the consumer credit crisis that blighted one of the most profitable parts of the banking industry two years ago, and that is still hanging around in the form of restructured loans (at much less lucrative terms for the banks) on their balance sheets.

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