CTBC Financial Holding: The next regional titan?

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CTBC has expanded strategically across southeast Asia, but now needs to develop its presence in China to make it a leader in regional banking.

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Daniel Wu, CTBC: needs to do more in China


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CTBC has expanded its business using a mix of organic growth and acquisitions. In Japan, it took the latter route, buying Tokyo Star in 2014. It might seem surprising to see a Taiwanese bank enter Japan’s tepid banking system, but Tokyo Star’s 900 or so employees have given CTBC a way to appeal directly to Japanese companies doing much the same as CTBC’s long-established Taiwanese clients: going offshore.

“We don’t intend to become much bigger in Japan,” says Daniel Wu, president of CTBC. “It’s a boutique approach. We’re small and beautiful.”

CTBC’s plan in southeast Asia is to follow Taiwanese manufacturers, which are moving their operations to countries with cheaper labour forces.

But Wu is not planning to spread across the region haphazardly. His plan hinges on identifying a few key markets that will form the lynchpin of the southeast Asian business.

Thailand and Indonesia are likely to be the two countries where CTBC invests the most.

The Philippines, despite being one of the fastest-growing economies in the region, is lower down the list, in part because fewer Taiwanese manufacturers have moved there.

Missing piece

This leaves one obvious market missing – and it is not a market CTBC can afford to ignore.

“We are a regional bank, but the missing piece is China,” says Wu.

“If you don’t have a presence in China, how can you call yourself a regional bank? That’s a tricky question for Taiwanese banks, because we’re a quarter century behind Europe and the US in that market.”

CTBC opened its first branch in mainland China in 2012, starting in Shanghai.

It has since added offices in Guangzhou, Xiamen and Shenzhen, the latter in January. CTBC has other assets in China: a leasing company, a consumer finance company and a life insurance arm.


Wu is clearly realistic about the difficulties facing CTBC in China. He admits that the bank’s branch network on the mainland is too small and difficult to grow quickly 

But these businesses are all small, and mainland China still represents just 2% of total assets, according to Wu.

“We need to do more, given it’s such a big market,” he says. “We hope there will be less interference from the politics. Luckily, China is opening up to foreign banks. That’s really an opportunity to us, even though we’re coming in late.”

Wu is clearly realistic about the difficulties facing CTBC in China. He admits that the bank’s branch network on the mainland is too small and difficult to grow quickly.

But like many other bank chief executives interviewed for this issue, he is putting a lot of faith in digital solutions to expand the business.

Digital offering

CTBC has made serious efforts to improve its digital offering, for example, creating a separate digital finance division, whose head May Su reports directly to Wu.

It has also launched its Digital 4U service to retail clients, which makes it easier for them to get loans, make investments and manage their accounts, and it joined FinTechSpace, a government-funded fintech incubator.

“Digital changes everything,” says Wu. “The old rule used to be that 20% of your clients represented 80% of your revenues, but that was partly because you had to pick how to allocate your own resources. Digital means you can give all of your clients the full service. Smaller clients can have a much bigger impact on revenues.”

What about the chances of growth in Taiwan? Wu does not sound confident about the prospects, in part because regulators show little sign of pushing consolidation despite a fragmented banking system.

“Taiwan is over-banked,” he says. “It’s not a healthy market and the government is not encouraging consolidation. We’re the biggest privately owned bank, but we only have 6% market share.”

The overseas business now represents about 40% of CTBC’s revenues. Wu wants to push that to 45% in three years and 50% in 10 years.

“It’s difficult for us to do anything more in Taiwan,” he says. “But overseas there is much more room to grow.”