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Banking

Taiwan’s Chinatrust Commercial Bank’s great leap forward

The bank's entry into the mainland this month comes as competition for Taiwanese customers in China is heating up.

This month is supposed to herald an historic shift in Taiwan’s Chinatrust Commercial Bank’s regional footprint. In mid-April, the family-run private bank finally made the great leap forward onto the mainland. From the press release:

“Chinatrust Financial Holding Company, its main subsidiary, Chinatrust Commercial Bank, officially opened its new branch in Shanghai, as part of its overseas business expansion. It is the seventh Taiwanese bank to set up a branch in mainland China, Chinatrust plans to set up 90 operations in next ten years.”

But how realistic are these ambitions?

Firstly, as the seventh Taiwanese bank to open up shop on the mainland, is it behind the curve? Some of its competitors like Land Bank of Taiwan, Taiwan Cooperative Bank and Chang Hwa Bank have already had representative offices in China when the ECFA (Economic Cooperation Framework Agreement) was signed, and were approved in September and October 2010 to upgrade to foreign bank branches.

Secondly, at this late stage in the game, can banks like Chinatrust compete with those on the mainland?

As previously reported by Euromoney:

Questions remain over the ability of Taiwanese banks to steal back Taiwanese companies that have long been established on the mainland. Although tech company Hon Hai has its headquarters in Taipei, it has been present in mainland China for the past 20 years and is well established there. “A company like this would easily gain support from Chinese or international banks,” says Pandora Lee, Taiwan analyst at UBS. What will motivate them to turn to Taiwanese banks?

Lee argues that Taiwanese branches abroad have accomplished little. “Most Taiwanese banks have branches in places like the Philippines and Vietnam but these branches do not perform as well as domestic branches," she says. "They are only doing business with overseas Taiwanese people in the region. Doing business with a limited amount of people prevents Taiwanese banks from gaining any meaningful presence in Southeast Asia.” Could the same be said for branches in China?

At least the company employees that couldn’t make it are still feeling the love:

“Though not all staff could join the opening, Chinatrust staff from worldwide sent 80,000 hand-made origami stars to give their best wishes, and the stars were used in the following kick-off ceremony."

 
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