Taipei, Nov. 19, 2012 (CENS)--The offshore banking units (OBUs) and overseas branches of domestic banks are expected to contribute over 30% of domestic banks’ profits this year, a new high in the wake of the global financial tsunami. To further expand their overseas operations, domestic banks are zeroing in on major enterprises in Europe, the U.S., and mainland China for loaning service.
The Financial Supervisory Commission (FSC) pointed out that share of OBUs and overseas branches in the profits of domestic banks will be even higher in the future, thanks in part to the opening up of renminbi-related businesses and cross-Taiwan financing.
Mega Bank is expected to derive 50% of its profits from OBUs and overseas branches this year, the highest among domestic banks. The FSC predicted that profits of OBUs will hit new high again this year, following last year’s record performance.
The high profits contribution of OBUs and overseas branches underscores the internationalization of Taiwanese banks, as major domestic banks strive to develop overseas businesses, in order to avoid acute competition resulting from overbanking at the domestic front. They encountered a major setback in overseas markets during the global financial tsunami in 2008, however, incurring heavy loss from overseas loaning and financial operations. The impact was especially serious for those with higher extent of internationalization. In 2009, the share of international business in the profits of domestic banks, though, bounced back to 40%, thanks to large-scale reimbursement of previous loss, before sliding back in 2010.
Veteran bankers noted that despite the persistence of European-debt crisis, many established enterprises in the U.S. and Europe are still investing abroad via offshore firms in a third place, providing considerable loaning opportunities to Taiwanese banks.
In addition, the liberalization of cross-Strait policy has enabled the OBUs of Taiwanese banks to tap the businesses of Chinese enterprises and Chinese state enterprises. Moreover, with the permission for the OBUs to engage in renminbi-related businesses, many Taiwanese-invested enterprises have utilized the OBUs for international funding maneuvering.
Bankers reported that growing numbers of Chinese enterprises have sought loans from the OBUs of Taiwanese banks, opening a new business horizon for the latter.
(by Philip Liu)
