HSBC says to remain profitable in Taiwan after buy
TAIPEI (Reuters) - HSBC <0005.HK>, Europe's biggest bank, said on Monday it expected to remain profitable in Taiwan in 2008, as its acquisition of a local rival will help it access more clients in Asia's third-largest wealth management market.
HSBC <HSBA.L> on Friday agreed to receive $1.5 billion in Taiwan government funds and make a major cash infusion to rescue Taiwan's failed Chinese Bank, in the latest Taiwan acquisition by a global bank.
"Our performance will remain strong," Alistair Currie, president and chief executive of HSBC in Taiwan, told reporters. He added that the bank's combined business would be profitable next year. No figure estimates were given.
For its operations in Taiwan, HSBC had posted a pretax profit of T$2.56 billion in the January-October period, according to Taiwan government data. Rival Citibank earned T$12.18 billion during the same period in Taiwan, the data showed.
HSBC, which followed global rivals Citigroup <C.N>, Standard Chartered <STAN.L> <2888.HK> and ABN AMRO to acquire a Taiwan bank, will focus on expanding two competitive but profitable businesses: wealth management and small-medium enterprises (SMEs) investing in China.
Taiwan has attracted foreign firms, including the world's top wealth manager UBS <UBS.N> <UBSN.VX> and biggest U.S. insurer AIG <AIG.N>, as the island's affluent population only lags Japan and China in Asia.
A major part of the wealth comes from the SMEs of Taiwan, the biggest foreign investor in mainland China, prompting most global banks to set up a "Taiwan desk" to serve these clients.
"It's quite reasonable to expect the number will double or triple in the future," said the president, adding HSBC now has 24 Taiwan employees working in China to serve the Taiwan clients.
It would take up to two years to complete the integration with the distressed lender, he said.
Shares of HSBC fell 1.87 percent in late Hong Kong trading, outperforming a 3.5 percent slide in the Hang Seng Index <.HSI>.
(Reporting by Faith Hung; editing by Baker Li)