The 19th Annual Conference on PBFEAM
Comparison of bank competitiveness
between Taiwan and China
Thomas M. F. Yeh
Vice Chairman
Polaris Financial Group
Taipei, Taiwan
July 9, 2011
1
Outline
I. 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
2
I. Overview of Taiwan’s Bank Competitiveness and China’s
 Overall Competitiveness
Latest ranking ─ China is No.19；Taiwan is No.6.
IMD China
IMD Taiwan
6
17
24
16
26
17
20
28
17
18
22
27
8
11
12
15
13
18
23 18
17
29
19
20
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
IMD China
IMD Taiwan
2008
2009
2010
2011
2008
Overall
Competitiveness
17
20
18
19
13
23
8
6
Economic
Performance
2
2
3
3
21
27
16
8
16
18
6
10
Government Efficient
12
15
25
33
10
22
3
3
Business Efficient
33
37
28
25
17
23
17
16
Infrastructure
31
32
31
28
Data source：IMD the World Competitiveness Yearbook.
2009 2010 2011
3
I. Overview of Taiwan’s Bank Competitiveness and China’s
•
Business Efficiency ─ Finance ─ Banking efficiency
 Taiwan is superior to China in banking sector,
including the financial cards, the banking regulation
and supporting business activities efficiently.
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)
Banking and
financial services (do
support business
activities efficiently)
Finance and Banking
regulation (is
sufficiently effective)
Financial cards in
circulation (Number
of cards per capita)
Financial cards
transactions (US$
per capita)
4
4
4
4
2
2
2
3
13
16
13
6
11
4
17
22
1
1
1
3
36
41
53
48
25
18
34
36
1
2
8
5
36
44
38
37
6
6
5
5
5
5
6
3
23
28
28
35
28
28
15
27
12
13
14
18
44
48
50
35
Data source：IMD The World Competitiveness Yearbook 2011、2010、2009。
4
I. Overview of Taiwan’s Bank Competitiveness and China’s
•
Business Efficiency ─ Finance ─ Stock Market Efficiency
 Taiwan is also superior to China in the stock
markets, excepting the listed domestic companies.
Ranking
Country
Item/Year
Stock markets (provide
adequate financing to
companies)
Stock market
capitalization
(Percentage of GDP)
Taiwan
Hong Kong
China
2011 2010 2009 2008 2011 2010 2009 2008 2011 2010 2009 2008
2
3
13
14
1
1
1
2
32
32
33
44
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。
5
I. Overview of Taiwan’s Bank Competitiveness and China’s
• Business Efficiency ─ Finance ─ Management Practices
 Taiwan has well developed VC industry, sufficient
financial institutions' transparency and consumer
protection, but China still has a long way to go.
Ranking
Country
Item/Year
Credit (is easily
available for
businesses)
Venture capital (is
easily available for
businesses)
Customer
Satisfaction (is
emphasized in
companies)
Financial
institutions'
transparency (is
sufficiently
implemented)
Taiwan
Hong Kong
China
2011 2010 2009 2008 2011 2010 2009 2008 2011 2010 2009 2008
4
1
12
17
6
4
7
6
37
40
43
52
4
4
6
4
3
1
2
2
32
39
55
51
6
7
7
4
17
18
13
6
36
43
56
47
15
16
39
39
11
17
5
8
51
56
54
52
Data source：IMD The World Competitiveness Yearbook 2011、2010、2009。
6
Ⅱ.Overview of Taiwan’s Bank Competitiveness and China’s
• Business Efficiency ─ Finance ─ Availability of Skills and
Education
 China has more facilities to attract foreign high-skilled people
than Taiwan, though Taiwan has more finance skills available.
Ranking
Country
Item/Year
Taiwan
Hong Kong
China
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。
7
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.
Unit：U.S. $Trillion
Year 2005
Top 1~10 banks
by tier 1 capital
Year 2010
Countr
Assets
Assets
Top 1~10 banks Country
y
(Ranking) (Ranking) by tier 1 capital
of
US
Citigroup
1.48 (2)
2.22 (6) Bank
US
America Corp
Morgan
US
JP Morgan Chase
1.16 (7)
2.03 (8) JP
US
Chase
UK
HSBC Holdings
1.28 (4)
1.86 (10) Citigroup
US
Bank of America
Royal Bank of
US
1.11
(10)
2.75
(2)
UK
Corp
Scotland
Agricole
France Credit
1.24 (5)
2.36 (4) HSBC Holdings
UK
Groupe
Royal Bank of
Wells Fargo
UK
1.12
(9)
1.24
(22)
US
Scotland
&Co
Tokyo
JAPAN Mitsubishi
0.98 (12) 1.73 (11) ICBC
China
Financial Group
Financial
JAPAN Mizuho
1.30 (3)
2.96 (1) BNP Paribas
France
Group
UK
HBOS
0.76 (19) 1.60 (14) Banco
Spain
Santander
8
France BNP Paribas
1.23 (6)
2.23 (5) Barclays
UK
Data source： July 2005 & July 2010, The Banker
Top 1000 World banks in Taiwan and in China
 From the view of bank size, Taiwan’ bank is far behind
Unit：U.S. $Trillion
of China.
Top 1000
World
banks
Ranking
151
174
202
228
229
238
Taiwan Top 1~10
banks by tier 1
capital
Bank of Taiwan
Mega International
Commercial Bank
Chinatrust
Commercial Bank
Taiwan Cooperative
Bank
Shanghai Commercial
& Savings Bank
Hua Nan Financial
Holdings
Assets
(Ranking)
Assets
(Ranking)
0.122(127)
1.73( 11)
Industrial
Commercial Bank of
China
0.068(174)
1.28( 21)
Bank of China
0.054(210)
1.41( 18)
0.080(158)
1.03( 25)
0.034(295)
0.48( 46)
China Construction
Bank Corporation
Agricultural Bank of
China
Bank of
Communications
0.057(203)
0.26( 72)
China CITIC Bank
264
Land Bank of Taiwan
0.066(181)
0.21( 89)
272
Cathy United Bank
0.041(264)
0.30( 63)
First Commercial Bank 0.060(191)
0.20( 93)
275
278
Taipei Fubon Bank
Data source： July 2010, The Banker
Top 1000
China Mainland’s單位：百萬美元
World
Top 1~10 banks
banks
by tier 1 capital
Ranking
0.042(258)
0.24( 81)
China Minsheng
Banking Corp
China Merchants
Bank
Industrial Bank
Shanghai Pudong
Development Bank
7
14
15
28
49
67
80
81
97
108
9
I. Overview of Taiwan’s Bank Competitiveness and China’s
Taiwan’s bank size and China’s
 Taiwan’ bank assets is far below the level of the world’s top
100 bank’s.
•
Taiwan’s bank
175,397
The Level of the
world’s top 100
bank’s assets
Unit： U.S. $ million
140,000
121,786
120,000
100,000
80,392
80,000
68,785
65,710
60,139
60,000
56,854
54,057
46,180
42,472
41,181
40,000
20,000
0
Bank of
Taiwan
Taiwan
Cooperative
Mega
Land Bank
•Data source：THE BANKER, July 2010
First
Hua Nan
Chinatrust
Chang Hwa
Taipei
Fubon
Cathy United
10
I. Overview of Taiwan’s Bank Competitiveness and China’s
Taiwan’s bank size and China’s
 China’s top 10 bank assets is above the level of the world’s
top 100 bank’s.
China’s bank
•
1,800,000 1,725,938
Unit： U.S. $ million
1,600,000
1,409,355 1,281,183
1,400,000
1,200,000
1,026,021
1,000,000
800,000
600,000
484,628
302,853 259,956
237,649 208,897 195,097
175,397
400,000
200,000
0
ICBC
China
Bank of Agricultural Bank of
China
Construction China
CommunicationsMerchants
•Data source：THE BANKER, July 2010
CITIC
Shanghai
Pudong
China
Industrial
China
Minsheng
Everbright
175,397
The Level of the
world’s top 100
bank’s assets
11
I. Overview of Taiwan’s Bank Competitiveness and China’s
The Scale of Asia Countries’ Leading Banks
 All of Japan, China, South Korea and Singapore’s leading
bank assets are above the level of the world’s top 100 bank’s.
The Top 10 Domestic Banks
The Asia Leading Banks
2 ,0 0 0 ,0 0 0
1 ,5 0 0 ,0 0 0
1 ,0 0 0 ,0 0 0
The Level of the
world's Top 100
Bank's Assets
5 0 0 ,0 0 0
0
Mitsubishi
ICBC
Kookmin
Asset(unit:U.S.$ million) 2,025,830 1,725,938 219,698
World’s Rank
9
11
83
T aiwan
Mega
Cooperati Internatio
ve Bank
nal
Land
Bank of
T aiwan
First
Hua nan
Chang
Commerci Commerci Chinatrust
Hua
al bank
al, Ltd
Commerci
DBS
Bank of
T aiwan
184,351
121,786
80,932
68,785
65,710
60,139
56,854
54,057
46,180
42,472
41,181
97
127
158
174
181
191
203
210
239
258
264
•Data source：THE BANKER, July 2010
T aipei
Fubon
12
I. Overview of Taiwan’s Bank Competitiveness and China’s
Domestic Banks’ ROA in Taiwan
 Taiwan’s Domestic bank’s ROA is below the level of the
lowest international standard.
%
Banks
Lowest International Standard
4.00
3.50
3.00
2.50
2.00
1.50
1.00
0.48
0.22
0.50
0.63
0.58
0.3
0.27
0.14
0.00
2000
2001
2002
2003
2004
2005
-0.50
2006
-0.3
2007
0.16
2008
0.28
2009
2010
-0.48
-1.00
•Data source：http://www.banking.gov.tw
Year
13
I. Overview of Taiwan’s Bank Competitiveness and China’s
Domestic Banks’ ROE in Taiwan
 Taiwan’s Domestic bank’s ROE is still below the level of the
lowest international standard.
Banks
%
Lowest International Standard
25.00
20.00
15.00
10.3
10.00
9.1
6.19
5.00
3.6
4.81
3.52
4.49
2.21
0.00
2.47
-0.43
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
-5.00
-6.93
-10.00
•Data source：http://www.banking.gov.tw
14
Year
I. Overview of Taiwan’s Bank Competitiveness and China’s
Emerging-market Countries’ Market Share of 5
Largest Banks in Asia
 China and Taiwan’s 5 largest banks’ market share is 51.6%
and 38.9% respectively.
%
100
80
74
60.7
54.2
60
51.6
51.6
49.9
38.9
40
37.6
20
0
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.
15
I. Overview of Taiwan’s Bank Competitiveness and China’s
Emerging-market Countries’ State Ownership
Banks/Sector in Asia
 China and Taiwan’s state ownership banks over banking
sector is 51.3% and 53.6% respectively.
%
100
73.7
80
60
47.1
40
53.6
51.3
45.3
32.5
17.7
20
0
12.9
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.
16
I. Overview of Taiwan’s Bank Competitiveness and China’s
 Business Environment
 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.
 Taiwan is still superior to China in BERI’ rating.
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
Data source：Business Risk Service, BERI, 2008~2011.
17
II. SWOT Analysis
• Taiwan’s Bank SWOT analysis
Strengths
Weaknesses
‧ Abundant available fund in banking
‧ Fragile market structure.
system.
‧ Financial system not sufficiently
‧ Well developed VC industry.
internationalized.
‧ More experiences to serve SMEs and ‧ International language abilities are
Taiwanese firms.
inadequate.
‧ Small bank size.
‧Thinning profits of financial
industries.
Opportunities
Threats
‧ Ability to integrate ethnic Chinese
‧ Financial brain drain presents a
resources and put them to work in the
threat to Taiwan’s industrial
financial market.
development.
‧Making a new role of intermediary for ‧ Threatened by foreign banks in
China.
European, American and Japanese
businesses entering the China market ‧ US-Taiwan trade platform smaller
after signing EFCA.
than US-China.
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II. SWOT Analysis
• China’s Bank SWOT analysis
Strengths
‧Large banks.
‧Large loan spread.
‧ A one-party system and higher
state-owned banks make things get
done in a hurry without destructive
filibustering.
Opportunities
Weaknesses
‧International financial professionals
are still not enough.
‧ Financial regulation and consumers
protection still need improving.
‧SME competitiveness needs to be
raised.
Threats
‧Opening financial markets to
‧ Over–expansion in credit.
foreigners step by step.
‧Overheated economy resulted from
‧ Large fund to merge foreign
the shooting price of real estates and
businesses and financial institutions. loan growth.
19
Ⅲ.CONCLUSION
• 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 stateowned 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
20
transformation.
THANK YOU！
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