Financial Holding Companies The New Competitive Dynamics

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Financial Holding Companies -The New Competitive
Dynamics

• Mei Chiang
• Director
• Financial Services Ratings
• Taiwan Ratings Corp.

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• Reshaping Financial Landscape
• With their substantial and growing market shares,
  FHCs have already played a critical role in
  reshaping Taiwan financial landscape.

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FHCs Their Members
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Make Up of FHCs
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Substantial Market Shares
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• Accelerating Market Transformation
• - Taking advantage of increased flexibility, such
  as merger acquisitions, capital restructuring
  and funding capability, FHCs are actively
  grasping opportunities to enhance their
  competitiveness. Market transformation is set to
  accelerate, with differentiation among peers
  expected to widen.

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Mergers under FHCs

• Banks
• Taishin Dah An
• Cathay United UWCCB
• Chinatrust Grand
• Fubon TAIPEIBANK
• Chiao Tung ICBC

Securities Firms SinoPac National Barits
Intl Chun Hsin Grand Cathay First
Taiwan Insurance Companies Bills Finance
Companies
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Capital Restructuring
Capital upstream
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Overseas Issuance
ECBs rated by SP's
USmn
Issue ratings
Cathay FHC
700
BBB
Fubon FHC
688
BBB
Chinatrust FHC
350
BBB-
CD FHC
310
BBB
SinoPac Holdings
230
BB
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• Creating New Competitive Dynamics
• - Consolidated group strength, synergies,
  integration risks have become the new factors
  that impact a financial institution's
  competitiveness.

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Poential Synergies

• Cross selling
• Cost saving
• Capital allocation
• Diversification
• Economies of scale

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Integration Risks

• Loss of assets
• Culture crash
• Rising complexity for mangement

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• FHC Rating Methodology
• Status quo ratings for key subsidiaries
• Notional group rating
• Notching down for holding company
• Final ratings for subsidiaries

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• Rating Issues in Assessing Taiwan FHCs
• Cross financial sectors
• Frequent change of management strategies
• Active merger activities
• Evolving roles for subsidiaries
• Testing fungibility of resources

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Rating List