1 the 19th annual conference on pbfeam thomas m. f. yeh vice chairman polaris financial group...
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1
The 19th Annual Conference on PBFEAM
Thomas M. F. Yeh Vice Chairman
Polaris Financial GroupTaipei, Taiwan
July 9, 2011
Comparison of bank competitiveness between Taiwan and China
Comparison of bank competitiveness between Taiwan and China
2
OutlineI. Overview of Taiwan’s Bank Competitiveness and China’s
Overall Competitiveness Business Efficiency ─ Finance & Management Top 1000 World banks 1~10 Top 1000 World in Taiwan and in China Taiwan’s bank size and China’s The Scale of Asia Countries’ Leading Banks Countries’ Market Share of 5 Largest Banks in
Asia Countries’ State Ownership Banks/Sector in Asia Business Environment
II. SWOT Analysis Taiwan’s Bank SWOT analysis China’s Bank SWOT analysis
III. CONCLUSION
3Data source : IMD the World Competitiveness Yearbook.
IMD China
2008 2009 2010 2011
Overall Competitiveness
17 20 18 19
Economic Performance
2 2 3 3
Government Efficient 12 15 25 33
Business Efficient 33 37 28 25
Infrastructure 31 32 31 28
Overall Competitiveness Latest ranking ─ China is No.19 ; Taiwan is No.6.
IMD China
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
24 26
22
2728 29
I. Overview of Taiwan’s Bank Competitiveness and China’s
18
15 17
20
18 19
IMD Taiwan 68
23
IMD Taiwan
2008 2009 2010 2011
13 23 8 6
21 27 16 8
16 18 6 10
10 22 3 3
17 23 17 16
1318171112
1720
1617
4
Ranking
Country Taiwan Hong Kong China
Item/Year 2011 2010 2009 2008 2011 2010 2009 2008 2011 2010 2009 2008
Banking sector assets (Percentage of GDP)
4 4 4 4 2 2 2 3 13 16 13 6
Banking and financial services (do support business activities efficiently)
11 4 17 22 1 1 1 3 36 41 53 48
Finance and Banking regulation (is sufficiently effective)
25 18 34 36 1 2 8 5 36 44 38 37
Financial cards in circulation (Number of cards per capita)
6 6 5 5 5 5 6 3 23 28 28 35
Financial cards transactions (US$ per capita)
28 28 15 27 12 13 14 18 44 48 50 35
Data source:IMD The World Competitiveness Yearbook 2011、2010、2009。
• Business Efficiency ─ Finance ─ Banking efficiency
I. Overview of Taiwan’s Bank Competitiveness and China’s
Taiwan is superior to China in banking sector, including the financial cards, the banking regulation and supporting business activities efficiently.
5
Ranking
Country Taiwan Hong Kong China
Item/Year 2011 2010 2009 2008 2011 2010 2009 2008 2011 2010 2009 2008
Stock markets (provide adequate financing to companies)
2 3 13 14 1 1 1 2 32 32 33 44
Stock market capitalization (Percentage of GDP)
5 7 8 7 1 1 1 1 15 18 7 24
Value traded on stock markets (US$ per capita)
7 16 13 15 1 4 4 2 26 31 28 38
Listed domestic companies (Number)
11 10 10 10 10 11 12 11 9 9 9 9
Shareholders’ Rights (are sufficiently implemented )
28 16 48 34 24 36 27 30 53 51 54 53
Data source:IMD The World Competitiveness Yearbook 2011、2010、2009。
• Business Efficiency ─ Finance ─ Stock Market Efficiency
I. Overview of Taiwan’s Bank Competitiveness and China’s
Taiwan is also superior to China in the stock markets, excepting the listed domestic companies.
6
Ranking
Country Taiwan Hong Kong China
Item/Year 2011 2010 2009 2008 2011 2010 2009 2008 2011 2010 2009 2008
Credit (is easily available for businesses)
4 1 12 17 6 4 7 6 37 40 43 52
Venture capital (is easily available for businesses)
4 4 6 4 3 1 2 2 32 39 55 51
Customer Satisfaction (is emphasized in companies)
6 7 7 4 17 18 13 6 36 43 56 47
Financial institutions' transparency (is sufficiently implemented)
15 16 39 39 11 17 5 8 51 56 54 52
Data source:IMD The World Competitiveness Yearbook 2011、2010、2009。
• Business Efficiency ─ Finance ─ Management PracticesI. Overview of Taiwan’s Bank Competitiveness and China’s
Taiwan has well developed VC industry, sufficient financial institutions' transparency and consumer protection, but China still has a long way to go.
7
Ranking
Country Taiwan Hong Kong China
Item/Year 2011 2010 2009 2008 2011 2010 2009 2008 2011 2010 2009 2008
Finance skills (are already available)
22 28 28 16 10 15 9 6 50 53 53 47
Foreign high-skilled people (are attracted to your country’s business environment)
26 25 32 26 7 4 7 9 16 19 13 18
International experience (of senior managers is generally significant)
15 16 25 21 2 3 2 3 56 58 57 44
Competent senior managers (are readily available)
16 21 26 18 1 10 2 5 34 47 30 44
English Proficiency ─ TOFEL (TOFEL scores)
54 53 51 ─ 46 46 43 ─ 52 50 45 ─
Data source:IMD The World Competitiveness Yearbook 2011、2010、2009。
• Business Efficiency ─ Finance ─ Availability of Skills and Education
Ⅱ.Overview of Taiwan’s Bank Competitiveness and China’s
China has more facilities to attract foreign high-skilled people than Taiwan, though Taiwan has more finance skills available.
8
Data source : July 2005 & July 2010, The Banker
Unit : U.S. $Trillion
Year 2005 Year 2010Countr
yTop 1~10 banks by tier 1 capital
Assets (Ranking)
Assets (Ranking)
Top 1~10 banks by tier 1 capital Country
US Citigroup 1.48 (2) 2.22 (6) Bank of America Corp US
US JP Morgan Chase 1.16 (7) 2.03 (8) JP Morgan Chase US
UK HSBC Holdings 1.28 (4) 1.86 (10) Citigroup US
US Bank of America Corp 1.11 (10) 2.75 (2) Royal Bank of
Scotland UK
France Credit Agricole Groupe 1.24 (5) 2.36 (4) HSBC Holdings UK
UK Royal Bank of Scotland 1.12 (9) 1.24 (22) Wells Fargo
&Co US
JAPAN Mitsubishi Tokyo Financial Group 0.98 (12) 1.73 (11) ICBC China
JAPAN Mizuho Financial Group 1.30 (3) 2.96 (1) BNP Paribas France
UK HBOS 0.76 (19) 1.60 (14) Banco Santander Spain
France BNP Paribas 1.23 (6) 2.23 (5) Barclays UK
Top 1000 World banks 1~10 In Asia, China has become the most potential country in
banking sector from the view of top 10 world banks.
9
單位:百萬美元
Top 1000World banks
Ranking
Taiwan Top 1~10 banks by tier 1
capital
Assets (Ranking)
Assets (Ranking)
China Mainland’s Top 1~10 banks by tier 1 capital
Top 1000World banks
Ranking
151 Bank of Taiwan 0.122(127) 1.73( 11)Industrial
Commercial Bank of China
7
174 Mega International Commercial Bank 0.068(174) 1.28( 21) Bank of China 14
202 Chinatrust Commercial Bank 0.054(210) 1.41( 18) China Construction
Bank Corporation 15
228 Taiwan Cooperative Bank 0.080(158) 1.03( 25) Agricultural Bank of
China 28
229 Shanghai Commercial & Savings Bank 0.034(295) 0.48( 46) Bank of
Communications 49
238 Hua Nan Financial Holdings 0.057(203) 0.26( 72) China CITIC Bank 67
264 Land Bank of Taiwan 0.066(181) 0.21( 89) China Minsheng Banking Corp 80
272 Cathy United Bank 0.041(264) 0.30( 63) China Merchants Bank 81
275 First Commercial Bank 0.060(191) 0.20( 93) Industrial Bank 97
278 Taipei Fubon Bank 0.042(258) 0.24( 81) Shanghai Pudong Development Bank 108
Top 1000 World banks in Taiwan and in China
Data source : July 2010, The Banker
Unit : U.S. $Trillion
From the view of bank size, Taiwan’ bank is far behind of China.
10
The Level of the world’s top 100 bank’s assets
175,397 Unit : U.S. $ million
•Data source : THE BANKER, July 2010
•
60,139 56,854 54,05746,180 42,472 41,181
65,71068,785
121,786
80,392
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
Bank ofTai wan
Tai wanCooperati ve
Mega Land Bank Fi rst Hua Nan Chi natrust Chang Hwa Tai pei Fubon
Cathy Uni ted
Taiwan’s bank size and China’s
Taiwan’s bank
I. Overview of Taiwan’s Bank Competitiveness and China’s
Taiwan’ bank assets is far below the level of the world’s top 100 bank’s.
11
The Level of the world’s top 100 bank’s assets
175,397
•Data source : THE BANKER, July 2010
•
484,628
302,853 259,956 237,649 208,897 195,097 175,397
1,026,021
1,281,183
1,725,938
1,409,355
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
I CBC Chi naConst ruct i on
Bank of Chi na
Agr i cul t ural Bank ofCommuni cat i ons
Chi na Merchant s
CI TI C Shanghai Pudong
Chi na Mi nsheng
I ndust r i al Chi naEverbr i ght
Taiwan’s bank size and China’s
China’s bankUnit : U.S. $ million
I. Overview of Taiwan’s Bank Competitiveness and China’s
China’s top 10 bank assets is above the level of the world’s top 100 bank’s.
12
0
500,000
1,000,000
1,500,000
2,000,000
Asset(unit:U.S.$ million) 2,025,830 1,725,938 219,698 184,351 121,786 80,932 68,785 65,710 60,139 56,854 54,057 46,180 42,472 41,181
Mitsubishi ICBC Kookmin DBSBank ofTaiwan
TaiwanCooperative Bank
MegaInternatio
nal
LandBank ofTaiwan
FirstCommerci
al bank
Hua nanCommerci
al, LtdChinatrust
ChangHua
Commerci
TaipeiFubon
The Level of theworld's Top 100Bank's Assets
The Top 10 Domestic BanksThe Asia Leading Banks
World’s Rank 9 11 83 97 127 158 174 181 191 203 210 239 258 264
The Scale of Asia Countries’ Leading Banks
•Data source : THE BANKER, July 2010
I. Overview of Taiwan’s Bank Competitiveness and China’s
All of Japan, China, South Korea and Singapore’s leading bank assets are above the level of the world’s top 100 bank’s.
13
0.27
0.630.3
0.14 0.16 0.280.58
-0.3-0.48
0.220.48
-1.00
-0.50
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Banks Lowest International Standard
Year
%
Domestic Banks’ ROA in Taiwan
•Data source : http://www.banking.gov.tw
I. Overview of Taiwan’s Bank Competitiveness and China’s
Taiwan’s Domestic bank’s ROA is below the level of the lowest international standard.
14
3.6
-6.93
3.52
10.3
4.81
-0.432.21 2.47
4.49
9.16.19
-10.00
-5.00
0.00
5.00
10.00
15.00
20.00
25.00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Banks Lowest International Standard
Year
%
Domestic Banks’ ROE in Taiwan
•Data source : http://www.banking.gov.tw
I. Overview of Taiwan’s Bank Competitiveness and China’s
Taiwan’s Domestic bank’s ROE is still below the level of the lowest international standard.
15
74
60.754.2 51.6 51.6 49.9
38.9 37.6
0
20
40
60
80
100
Tailand South Korea Maylasia Phillippines China Indoneisia Taiwan India
Data Source: EM Banking System Datawatch,FitchRatings,25 November 2010. All data as at end-H1 10.
%
Emerging-market Countries’ Market Share of 5 Largest Banks in Asia
I. Overview of Taiwan’s Bank Competitiveness and China’s
China and Taiwan’s 5 largest banks’ market share is 51.6% and 38.9% respectively.
16
17.7
32.5
47.1
12.9
51.345.3
53.6
73.7
0
20
40
60
80
100
Tailand South Korea Maylasia Phillippines China Indoneisia Taiwan India
%
Emerging-market Countries’ State Ownership Banks/Sector in Asia
Data Source: EM Banking System Datawatch,FitchRatings,25 November 2010. All data as at end-H1 10.
I. Overview of Taiwan’s Bank Competitiveness and China’s
China and Taiwan’s state ownership banks over banking sector is 51.3% and 53.6% respectively.
17
Data source : Business Risk Service, BERI, 2008~2011.
Business Environment Risk Intelligence
2008 2009 2010 2011(f)
Taiwan China Taiwan China Taiwan China Taiwan China
Business Risk Composite rating 5 17 5 16 4 15 4 13
Political Risk Index (ORI) rating 11 17 13 18 11 16 8 13
Operations Risk Index (PRI) rating
3 24 5 22 3 22 3 20
Remittance & Repatriation Factor (R - Factor) rating
5 8 4 9 3 9 3 8
BERI’ rating system, Business Risk Service (BRS), offers comprehensive assessments of operating conditions, political risk, and the foreign exchange/ external accounts position for 50 important countries.
Business EnvironmentI. Overview of Taiwan’s Bank Competitiveness and China’s
Taiwan is still superior to China in BERI’ rating.
18
Strengths Weaknesses ‧ Abundant available fund in banking
system. ‧ Well developed VC industry. ‧ More experiences to serve SMEs and
Taiwanese firms.
‧ Fragile market structure. ‧ Financial system not sufficiently
internationalized. ‧ International language abilities are
inadequate. ‧ Small bank size. ‧ Thinning profits of financial
industries.
Opportunities Threats ‧ Ability to integrate ethnic Chinese
resources and put them to work in the financial market.
‧ Making a new role of intermediary for European, American and Japanese businesses entering the China market after signing EFCA.
‧ Financial brain drain presents a threat to Taiwan’s industrial development.
‧ Threatened by foreign banks in China.
‧ US-Taiwan trade platform smaller than US-China.
• Taiwan’s Bank SWOT analysis
II. SWOT Analysis
19
Strengths Weaknesses ‧ Large banks. ‧ Large loan spread. ‧ A one-party system and higher
state-owned banks make things get done in a hurry without destructive filibustering.
‧ International financial professionals are still not enough.
‧ Financial regulation and consumers protection still need improving.
‧ SME competitiveness needs to be raised.
Opportunities Threats ‧ Opening financial markets to
foreigners step by step. ‧ Large fund to merge foreign
businesses and financial institutions.
‧ Over–expansion in credit. ‧ Overheated economy resulted from
the shooting price of real estates and loan growth.
• China’s Bank SWOT analysis
II. SWOT Analysis
20
• China’s banking system is still larger than other countries in Asia, but banking regulation and corporate governance should be improved in the near future, especially strengthening the financial institutions' transparency.
• Taiwan has suffered a setback in its effort to reform state-owned banks. Despite the setback, we expect the government to continue its financial reform efforts and mergers and acquisitions, albeit at a more cautious pace.
• The banking regulations in both sides of Taiwan Straits should be improved as soon as possible. The earlier this can be achieved, the higher its benefits will be and the lower its costs for the pacific basin as a whole.
• Both government’s long-term strategies are to continue improving the bank infrastructure for development, and to develop service industries to speed up economic transformation.
Ⅲ.CONCLUSION
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