與CEO對談– Special Edition for CEO Week On Air: Terence Tai, Chairman, and John Tsai, Vice Chairman, King’s Town Bank (2809 TT)
Caption: Chairman Terence Tai (4th from left) and Vice-Chairman John Tsai (3rd from left) join a clients’ groundbreaking ceremony. KTB prefers construction lending to the retail mortgage loan sector.
As John and I share a quick lunch in the staff cafeteria in the King’s Town Bank Corporate Headquarters, we look out over the Tainan skyline. I ask him, “How is it that King’s Town Bank came to focus on corporate loans to Taiwan’s small and medium-sized companies?”
John Tsai said, “Looking out of this window, I can see the offices of many businesses and family enterprises whose growth we have helped to fund. It gives me a great sense of satisfaction. Lending to corporates has always been an important part of this bank’s DNA. The bank was founded as Tainan Business Bank in 1948, and even when we took it over it had a history of banking with SMEs. We decided to use that history as a strength.”
John pauses, and then says, “We are a different kind of bank. We are driven by profit, not by size. Most banks in Taiwan have a supermarket model – they attempt to serve every type of customer in a wide variety of business segments. That’s not our style. We stick to what we do best. When you lend to big corporates, you are competing with every other bank in Taiwan, and there is no room for differentiation. So, all the economics get competed away. The market for SME loans is an underserved area. We target bigger SMEs or small big corporates, many of whom already have a banking relationship with us. We find out what their needs are and we provide them with a tailor-made solution. In return, we can charge a higher fee.”
As the executive representative of the Tsai family, which holds a controlling stake in King’s Town Bank, John works closely with Chairman Terence Tai, who is also a major shareholder. Their offices are next to each other in the bank’s Taipei office, and they can frequently be seen together, discussing banking strategy and operations.
Chairman Tai is seen as an investment guru in Taiwan, and the local media often attend King’s Town Bank investor conferences on the hope they can pick up hints regarding his view on global and local financial markets. We asked him, ‘As the Chairman and one of the largest shareholders in King’s Town Bank, how do you evaluate your own performance?’
He laughed, and said, “Every morning, the harshest critic of my performance looks back at me in the mirror. I work hard every day to make sure I am relevant at KTB and ask myself how I can provide a better return to investors. If I fail to do so, then not only am I a failure as an investor, but I also must take the blame from shareholders.”
When one talks to senior managers at the bank, they consistently comment about how the bank has a flat management structure, good relationships between departments and no fiefdoms – in part because managers are frequently switched between roles and locations. One group stands out in particular – the Taipei ‘ex-pats’ working at the Tainan Headquarters in southern Taiwan. When we met with this group of 4-5 senior managers in Tainan, the camaraderie between them was evident, and the meeting seemed more like a night out at a local KTV than a business affair. When asked how this culture was created, Chairman Tai says, “The back office is the backbone of our bank, and IT-driven management information systems provide me with the ability to rapidly train senior managers in areas outside of their core expertise. The ability to use data has changed the entire industry. Our managers must learn to be self-reliant, respond to change and communicate quickly. I send managers down to the Tainan HQ to understand how our staff and clients in the South live and work. This gives them an empathy for and understanding of the work that the front desk and back office employees do – something that they wouldn’t get if they had stayed in Taipei.”
No bank can provide consistently high returns without emphasis on asset quality. KTB led the Taiwan banking industry in ROA in 1H20 and has done so for years. Asked to comment, Chairman Tai says, “Why do customers like us? Because our decision cycle is faster, and we provide custom-made loans that other banks won’t provide. But you can only do that if you stick to the industries and clients that you know best, and by watching your credit costs. This business is simple – lending rate minus net funding & credit costs minus expenses creates your ROA.”
John nods his head in agreement, and adds, “We are very focused on the customer who can help ROA. A lot of banks in Taiwan want to look good in terms of size. We evaluate ourselves in terms of asset quality, capital position, ROA and ROE. Size is not our consideration, and it doesn’t affect how we pick our customer and market segments.”
King’s Town Bank will attend QIC’s CEO Week on Air, which will run from 8/31 to 9/4. Click here to find an introduction to the company and basic financial data.
If you would like to arrange a meeting with John Tsai, please contact yvonnehuang@qtumic.com.