Taipei--The pretax earnings of Taiwanese banks in their four major overseas markets fell more than 16 percent in 2016 from a year earlier due mainly to a sharp drop in their profits in the U.S. market after Mega International Commercial Bank (???) was fined heavily in a money laundering case there, the Financial Supervisory Commission (FSC) said Friday.
In 2016, the pretax earnings of Taiwanese banks in the four overseas markets -- Hong Kong, Japan, Singapore and the United States -- totaled NT$35 billion (US$1.16 billion), a 16.07 percent drop from the NT$41.7 billion recorded the previous year, the FSC said.
The earnings decline resulted mainly from annual drop of more than 50 percent in the banks' profits in the U.S. market in 2016 to NT$4.2 billion from NT$8.5 billion.
The main contributing factor was a US$180 million fine that the New York Department of Financial Service (DFS) imposed on Mega Bank in August after identifying "a number of suspicious transactions" between the bank's New York and Panama branches.
Mega Bank, the flagship banking entity of Mega Financial Holding Co. (???), was accused of violating U.S. money laundering laws when it failed to report suspicious transactions by its clients.
According the FSC data, the U.S. market fell from second in 2015 to fourth in 2016 in terms of profitability for Taiwanese banks.
Hong Kong remained at the top, with Taiwanese banks there posting NT$21.4 billion in pretax profits there last year, although the figure dropped from the NT$23 billion recorded the previous year. Japan was the second most profitable market for the banks, which earned NT$5.1 billion there in 2016, down from NT$6.7 billion the previous year.
In Singapore, their earnings rose in 2016 to NT$4.3 billion from NT$3.5 billion a year earlier.
Banking Bureau Deputy Director-General Lu Hui-jung (???) said that although the Mega Bank case has increased law compliance costs for Taiwanese banks in the U.S. market, the Taiwan banking sector still sees the U.S. as a major market as the the sector seeks to extend its reach overseas.
He said that the FSC on Thursday approved an application by Bank of Taiwan, the largest lender in the country, to set up a representative office in Silicon Valley on the U.S. West Coast.
So far, 12 Taiwanese banks have set up 23 branches and four subsidiaries on U.S. territory, namely in New York, Los Angeles, Seattle, Guam, Chicago and Silicon Valley, while CTBC Bank (???) has a representative office in Los Angeles.
Source: Focus Taiwan News Channel