Banking: Taiwan’s feet of clay
The island’s biggest lenders are pushing hard into Asia, snapping up regional banks in a quest for growth and higher returns. Back at home, though, the island’s banking sector remains as moribund as ever, hobbled by too small a market and powerful unions.
Crippled by powerful unions, a surfeit of competition at home and a lack of drive overseas, Taiwan’s banks have long been viewed as unambitious underachievers. Asia now boasts a small army of powerful regional lenders – think of ANZ, DBS and Maybank, to name but a few. All have benefited directly from the region’s long boom and from snapping up the market share left behind after the financial crisis by retreating western rivals.
Yet not one lending institution on this list hails from Taiwan. None even come close. For years, the island’s banks appear to have had their feet pre-baked in clay, so ponderously do they move.
That may finally be changing. A clutch of deals signed during the summer months point to a much-needed surge in financial M&A deals. In August, Taipei-based Yuanta Financial Holding agreed to buy Ta Chong Bank, a local lender part-owned by the American private equity firm Carlyle Group, for NT$56.6 billion ($1.73 billion) in cash and stock, the largest domestic financial transaction in more than four years. Within a fortnight, Yuanta was at it again, snapping up Hanshin Savings Bank for $112 million, marking the first foray into South Korea by a Taiwanese lender.