Taipei Times (TT): What has been the biggest challenge during the integration between Standard Chartered and Hsinchu International Bank (新竹商銀)?
James McCabe: There's an initial integration when you do an acquisition -- just kind of like a discovery process, where an integration team has been put together and figures out what's what, who's who. Then you start to bring in policy procedures, embracing the way local banks are doing things because this is an international bank that came to Taiwan really to become a very large local player after having been just a small foreign bank. So, there's a lot going on in the early stages combining your systems. And you have [what] we called "amalgamation" -- through merger, you put two businesses together.
On July 1, we merged the Standard Chartered Bank operation with Hsinchu operation to a new entity: Standard Chartered Bank Taiwan. In some cases, some people called that the end of integration, or "project." Integration is a journey, not really a project. And like any journey, it has many phases to it.
PHOTO: COURTESY OF STANDARD CHARTERED BANK (TAIWAN)
A very important phase is amalgamation: when you combine the bank, its customers and staffs. The regulators were extremely supportive of everything we've done so far. But then that journey continues and has continued as one bank because there are constantly things to learn from both sides, to upgrade and to continue developing. So, the first phase of integration has been a big success. But I think it's important for people to realize the journey will take a long time. What we are doing is revolutionary here in Taiwan. The combination of two cultures, two very different ways of doing things.
TT: How different?
McCabe: Some of the differences are obvious [and] some of the differences are more subtle. You have to deal with all of that. Basically, a foreign bank did not have access to the entire Taiwan market and all Taiwanese customers, so they tended to do what they have most access to, which would typically be larger companies and international elements of financing.
In our consumer banking side, it was more of the big cities or with a certain client segment because if there's only one branch or two branches, they can only do so much. But once you have the opportunities to embrace the entire nation through a nationwide 86-branch network, your dream is a bigger dream. Your opportunity is a bigger opportunity. Your journey is a longer journey and that's where we are now.
TT: What will make the journey successful?
McCabe: When we are embraced by our customers and when the community we're in gets the feeling that we are adding value and a good citizen. We are not a narrowly focused bank that only works with a few people. And we don't want to lose the feeling and reputation that Hsinchu International Bank had in its community. We want to show that community that we are as interested in them and still engaged with them and provide them with things even Hsinchu couldn't provide. So, we're not trying to change. We're trying to improve.
TT: A year go, some people said you had dug gold in the corporate clientele while others said you've overpaid for Hsinchu International Bank. How would you respond to those comments one year on?
McCabe: In just two years time, the acquisition will be successful enough. We'll be making enough money that adds value to the overall results of Standard Chartered Bank. And the investment will return a double digit rate of return. We reiterated the same confidence and focus. Everything we said on day one continues to be on track. In our merger acquisition, we acquired a good bank with good customers and reputation. We're not trying to resurrect somebody from the dead. This bank was very alive and in a good shape. All we're doing is combining our talents with their talents. It has to represent to the customers something more.
TT: How have Hsinchu-based corporate clients responded to your entry?
McCabe: They believed that we can combine what they were receiving locally from Hsinchu International Bank, what they would have expected from a foreign bank and package it all in one delivery, that is of course very exciting for corporate customers because it serves one-stop shopping now with the bank. Our relationship managers now have a broad product opportunity they can offer to customers. They can now service so many of their needs in a proactive way.
Our customers started with Hsinchu and they see something has improved. Previously, they wouldn't have seen Standard Chartered Bank because we wouldn't have visited those customers.
TT: Now that you have 86 branches in Taiwan, you have greater access to local clients. How does it work when these clients plan to extend their financial services overseas such as China?
McCabe: When you bank with Standard Chartered Bank in Taiwan, you're banking with a global organization. Our customers in every country are known to the organization globally as well as the local country. So, if you're customers of ours in Taiwan and you have businesses in Shanghai or anywhere else, we obviously can make the connection much more easily.
And it's so much easier for the customer to walk in to our branches in China, Vietnam, India or the Middle East. Everything for them is familiar. The products and services are similar. Their knowledge about the relationship is there. There's a familiarity as opposed to having to explain themselves to a local bank. Imagine how many people, especially in China in the last 10 years, had to start a relationship from zero with a big state bank, for example.
This way, the investment by the customer in bank in each other can pay a dividend that actually goes beyond national borders because you're connecting with the customers who engage with you in more than one country. That's something in the Asian market where we're so dominant. It's a real benefit to Taiwanese customers, who move, invest and travel internationally. Even in the SME [small and medium enterprise] level, there may be part of the supply chain that involves global trade to some extent. So, it's a marriage between the two.
TT: But as an international bank, you're also competing with other megabanks such as Citibank and HSBC in Chinese markets. China-based Taiwanese businessmen can just walk into any branch of an international bank, which are not necessarily Standard Chartered branches.
McCabe: You can say that about every international bank. The trick is how well you connect the dots. Some organizations are very large, but because they're so large, they don't focus as well on their network. They tend to be good in its locations and they don't connect, as I said, the dots. Maybe they have a little desk. But we start with a bigger base of customers in this country than any foreign bank.
For starters, we have many more customers needing us both here and outside. And then we have the biggest activities based in China, for example. Yes, we do similar things. But we have people from the same countries working in these other countries to facilitate that engagement and familiarity. So they don't walk in and see strangers or people who don't understand them or speak their languages. We bridge all of that with very similar structure.
TT: What is your plan to expand Standard Chartered Taiwan into the greater China market?
McCabe: We have the concept you mentioned -- desks. These sorts of things we have all over the world. So, we'll have Taiwanese in our organizations. We're a very diverse company. We employ people of maybe 100 different nationalities. So it's not unusual to see Taiwanese working for us in different parts of the world because we're becoming more and more local in many countries.
We've turned a local bank here. We've bought a local Korean bank a couple of years ago [while] becoming quickly a local bank in China as well. Obviously, we've been in Hong Kong forever, Vietnam more recently and India we're the biggest foreign bank. So, we have a good sense of local presence and we're able to facilitate the trade and investments of, in this case, Taiwanese in all these marketplaces.
We now have 4,500 employees in Taiwan. If you're a Taiwanese working in China, you want to work with Standard Chartered Bank. You want to meet employees of Standard Chartered in China or anywhere else because there's a connection that's much more relevant now to you. From a career perspective as well, we're finding good talent both in Taiwan and other countries because of this big network.
TT: How would you rate Taiwan's competitiveness as a financial center, compared to Shanghai, Hong Kong or Seoul?
McCabe: I think Taiwan is a strong location. There are others that are more developed and open on taxation laws like Hong Kong and Singapore. What I like about Taiwan is the dynamic relationship it has with China and Vietnam. It's starting to develop in India.
Every market is different. What is interesting about Taiwan are its people. They invest and engage both locally as well as internationally. So, that opportunity for us to be both a local bank and to help them work with our international bank in places they find relevant is very attractive.
And Taiwan will be very important to Standard Chartered Bank. Over time, it'll become a more important market in the region.
TT: Locally you've, like many other banks, targeted at the wealth management business. How do you find the segment's competition, since there's a lack of innovation in the area and every bank tends to provide similar products?
McCabe: The industry is very fragmented. There are too many banks in Taiwan.The industry needs consolidation. The government is not only leading that consolidation, but also trying to combine the entities after owning some 40
percent of the industry. They know banks that have larger market shares can offer more services and invest more.
Over the next four to five years, you'll find the industry constantly continuing to consolidate. Five years from now, the industry will be very different from the way it is today — and that's good. Customers will benefit, shareholders will benefit And overall, it'll be a sound
environment.
You've seen that in so many countries already. It's not about foreign takeovers. It's about the consolidation in the industry, both local as well as foreign. However, if nothing changes and all you're trying to do is steal
from the guy next door and lowering your prices with the only alternatives you have, then, it'll be a pretty bad market.
TT: Some pundits have suggested the government to auction all state-run banks. What would you suggest?
McCabe: The government has a plan and is executing it. You can discuss whether they are going too fast or too slow. But they want to consolidate first, make strong institutions and probably consolidate the government
activities into one or two banks in the first stage. It motivates other consolidations, so you have a top line of banks that's smaller but stronger. The second wave of that could possibly be the privatization of state-run
banks. I think it will all happen in stages. I don't think it's going to happen that some banks, all of sudden, everything is going up for sale. The
most important thing is to see changes continuing to happen.
In the past year and half, a lot has happened. You have private equity investing in to improve the capitalization of medium-size banks, for example. You have the takeover of poor-performing banks and sales of them in an open auction market. You have mergers happening between banks without any need for any government involvement. You're starting to see, just the last year or so, a much more dynamic movement. You'll continue to see that and
there are a lot of ways to do this.
The most important thing is to be orderly and transparent and keep moving in that direction. And I think, give it some time [since] we have elections and other issues coming up in the next few months. But basically the thrust of all that is not going to change.
CLASH OF WORDS: While China’s foreign minister insisted the US play a constructive role with China, Rubio stressed Washington’s commitment to its allies in the region The Ministry of Foreign Affairs (MOFA) yesterday affirmed and welcomed US Secretary of State Marco Rubio statements expressing the US’ “serious concern over China’s coercive actions against Taiwan” and aggressive behavior in the South China Sea, in a telephone call with his Chinese counterpart. The ministry in a news release yesterday also said that the Chinese Ministry of Foreign Affairs had stated many fallacies about Taiwan in the call. “We solemnly emphasize again that our country and the People’s Republic of China are not subordinate to each other, and it has been an objective fact for a long time, as well as
‘CHARM OFFENSIVE’: Beijing has been sending senior Chinese officials to Okinawa as part of efforts to influence public opinion against the US, the ‘Telegraph’ reported Beijing is believed to be sowing divisions in Japan’s Okinawa Prefecture to better facilitate an invasion of Taiwan, British newspaper the Telegraph reported on Saturday. Less than 750km from Taiwan, Okinawa hosts nearly 30,000 US troops who would likely “play a pivotal role should Beijing order the invasion of Taiwan,” it wrote. To prevent US intervention in an invasion, China is carrying out a “silent invasion” of Okinawa by stoking the flames of discontent among locals toward the US presence in the prefecture, it said. Beijing is also allegedly funding separatists in the region, including Chosuke Yara, the head of the Ryukyu Independence
‘VERY SHALLOW’: The center of Saturday’s quake in Tainan’s Dongshan District hit at a depth of 7.7km, while yesterday’s in Nansai was at a depth of 8.1km, the CWA said Two magnitude 5.7 earthquakes that struck on Saturday night and yesterday morning were aftershocks triggered by a magnitude 6.4 quake on Tuesday last week, a seismologist said, adding that the epicenters of the aftershocks are moving westward. Saturday and yesterday’s earthquakes occurred as people were preparing for the Lunar New Year holiday this week. As of 10am yesterday, the Central Weather Administration (CWA) recorded 110 aftershocks from last week’s main earthquake, including six magnitude 5 to 6 quakes and 32 magnitude 4 to 5 tremors. Seventy-one of the earthquakes were smaller than magnitude 4. Thirty-one of the aftershocks were felt nationwide, while 79
MARITIME SECURITY: Of the 52 vessels, 15 were rated a ‘threat’ for various reasons, including the amount of time they spent loitering near subsea cables, the CGA said Taiwan has identified 52 “suspicious” Chinese-owned ships flying flags of convenience that require close monitoring if detected near the nation, the Coast Guard Administration (CGA) said yesterday, as the nation seeks to protect its subsea telecoms cables. The stricter regime comes after a Cameroon-flagged vessel was briefly detained by the CGA earlier this month on suspicion of damaging an international cable northeast of Taiwan. The vessel is owned by a Hong Kong-registered company with a Chinese address given for its only listed director, the CGA said previously. Taiwan fears China could sever its communication links as part of an attempt
RSS