| Summary: | 碩士 === 國立臺北科技大學 === 經營管理系EMBA泰國境外專班 === 105 === Overseas expansion strategies of domestic banks mostly follow those of the local corporations. In recent years, Taiwanese enterprises have gradually focused more on “the South instead of the West”. In addition, the government has been promoting the “New Southbound Policy”, and encouraging the local banks to expand their regional footprints across Asia. Moreover, local banks must aggressively look for business opportunities overseas, and expand their markets further in view of excessive competition and deteriorating margins of the domestic market. On the other hand, large multi-national financial institutions have shrinking investment budgets for emerging markets after the financial crisis due to changes of international situations. This provides an opportunity for Taiwanese banks to enter these markets. In addition, ASEAN has incorporated the AEC, the RCEP, the 21st Century Maritime Silk Road (under the “Belt and Road” initiative), the Trans-Asian Railway and other infrastructure projects, which significantly prompted Taiwan-funded banks to prioritize investment plans and subsidiary set-up in Southeast Asia.
According to the FSC statistics, in 2015, Southeast Asia branches of Taiwanese banks generated $5.39 billion in profit, which is only second to $7.35 billion by the American branches. As of end of June in 2016, these Southeast Asia branches have generated $4.0 billion in profits, which exceeded the $3.88 billion by the American ones. Among the 10 countries in ASEAN, Thailand is located in the heart of Southeast Asia on the Indochina Peninsula, and is the hub for the new Silk Road and the Trans-Asian Railway under the “Belt and Road” initiative. It offers enormous incentive for the Taiwanese banking industry. However, currently there is only one Taiwanese bank, Mega ICBC, that has branches established in Thailand to operate commercial business. This is owing to rigorous restrictions towards market entry of foreign banks by the Bank of Thailand.
The purpose of this study is mainly to discuss how Taiwanese banks can strategize the entry into the Thai market. It started by a deeper look of the history of formal financial reforms and open market policy of the Bank of Thailand. The financial system in Thailand, established in 1940, was stringently protected by the government in the 1960 to 1970, and then was liberalized from the late 1980 to early 1990. After the Asia financial crisis in 1997, the Thailand banking sector has gone through restructuring and reforms, and relaxation of restrictions on shareholder equity ratio of foreign banks. Investment from foreign banks was only permitted during an economy downturn. It is presently in the third phase of financial reforms, which is from 2016 to 2020, yet there’s no such plan to admit branch set-up of foreign commercial banks.
This study has explicitly recommended entry strategies for Taiwanese banks that they shall seek appropriate targets for mergers and acquisitions or equity participation, or operate through other financial subsidiaries first. This familiarizes them with local culture, regulations, and talent development, and meanwhile allows them to build and maintain political and business relationships before the market opens up. Lastly, this study refers to potential targets that can be considered for mergers and acquisitions, or equity participation, and provides prospects for organizational structure, manpower planning, business development strategies, and three-year forecasts of balance sheets and income statements after opening, shall there be bank branch setup in the future.
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