Bank Sees Gains From Taiwan Buy BUSINESS ASIA By Bloomberg

By Perris Lee

Standard Chartered’s acquisition of a Taiwan bank, the first by an overseas investor, helps the company in “connecting the dots” on its Greater China strategy, its head of operations on the island said. “You’ve got 2 million people living in China,” the company’s Taiwan chief executive, Jim McCabe, said here this month, referring to Taiwanese on the mainland. “I like the position we’re in. I like what we can do.”

Standard Chartered’s $1.2 billion purchase of Hsinchu International Bank may bolster growth in both Taiwan and China. It added 83 branches to Standard Chartered’s existing 3 on the island to expand wealth management services while gaining access to Hsinchu’s list of clients, who may need bank services in China to support operations there.

The Taiwanese across the 180-kilometer, or 110-mile, strait are beyond the reach of the island’s banks, which are barred from opening branches in mainland China because Beijing and Taipei have yet to agree on a regulatory arrangement. Clients abroad often must turn to Chinese banks for wealth-management advice or loans.

McCabe, in his first media interview, declined to comment on who the bank’s clients were or how many operate in China. The Hsinchu industrial park, near one of Standard Chartered’s two main offices in Taiwan, is the cradle of many world-class technology companies like Taiwan Semiconductor Manufacturing Co. and Wistron.

“At least half of the companies in the industrial park have factories in China,” said Steven Chen of Taiwan Ratings in Taipei. “The acquisition allows Standard Chartered to expand trade-related business,” like for settling international payments, with the island’s smaller firms.

Taiwanese companies and individuals are the biggest investors in China, with about $150 billion into the country. Quanta Computer, Compal Electronics and Wistron, the world’s largest contract makers of notebook computers, make nearly all of their computers in China, said Ji-shih Huang, the top statistician at the Ministry of Economic Affairs.

“By focusing on the small and medium-sized companies in China, Standard Chartered is cutting into a niche business area where Taiwanese banks are totally absent,” said Sherry Lin, director of equity research of Credit Suisse in Hong Kong.

The bank said Tuesday that its global first-half profit rose 26 percent as revenue doubled in China. Standard Chartered, which is based in London, will have 40 branches in China by the end of 2007, up from 30 now, McCabe said. The bank also plans to add more than 1,000 employees, giving it 3,500 on the mainland by the end of the year.

Banks in China extended 2.5 trillion yuan, or $330 billion, in new loans in the first six months of the year, 14.7 percent more than a year earlier. That is almost five times the 3 percent loan growth of Taiwan banks in the first quarter.

Taiwan has more than 40 local banks, 30 foreign banks and hundreds of grass-roots lenders serving 23 million people, resulting in fierce competition for customers for almost every kind of financial service, from credit cards to mortgages.

(c) 2007 International Herald Tribune. Provided by ProQuest Information and Learning. All rights Reserved.