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Transcription

Untitled

Spokesperson:
Hank Chang
Executive Vice President
+886-2-8786-9888 Ext. 8879
[email protected]
Acting Spokesperson:
Tracy Chu
+886-2-8786-9888 Ext. 8887
[email protected]
Institute of Share Transfer:
Capital Securities Corp.
B2., No. 97, Dunhua S. Rd., Sec. 2, Taipei, Taiwan
+886-2-2702-3999
www.capital.com.tw
Rating Agency:
Taiwan Ratings Co., Ltd.
49F, No. 7, Xinyi Rd., Sec. 5, Taipei, Taiwan
+886-2-8722-5800
www.taiwanratings.com
Recent Financial Report audited by:
Chen-Hsiu Yang & Kuan-Chung Lai
Deloitte & Touche
12F, No. 156, Min-sheng E. Rd., Sec. 3, Taipei, Taiwan
+886-2-2545-9988
www.deloitte.com.tw
Name of exchange for trading in overseas listed
securities and information inquiry for The securities: Nil
2I¿FLDO:HEVLWH
http://www.tcbank.com.tw
Contents
ANNUAL REPORT 2014
01 I.
Report to Shareholders
09 ,,&RPSDQ\3UR¿OH
11 III.
Corporate Governance
73 IV. Capital Raised
93 V.
Operations Overview
123 VI. Financial Statements
148 VII. Financial Highlights and Analysis of Operational Results
and Risk Management
163 VIII. Special Notes
168 IX. Headquarters and Branches
172 Appendix 1. Consolidated Financial Statements for 2014
315 Appendix 2. Financial Statements for 2014
I
Report to Shareholders
I Report to Shareholders
Chairman
Chien-Ping Chen
Dear Shareholders,
With the support of its customers and shareholders and joint efforts of its staff, the Bank forged ahead both in terms of
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3. External Competitive Environment, Impact of the Regulatory Environment and Overall Business Environment
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SROLFLHVWRFRSHZLWKSRWHQWLDOULVNVRIUHDOHVWDWHFUHGLW
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7
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4. Conclusion
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VWDUWHGWRFDUU\RXWJUDGXDOO\PRYLQJRQWUDFNZLWKVWHDG\GHYHORSPHQW7KH%DQN¶VULVNFRQWURODQGDVVHWTXDOLW\UDQNDWWKH
LQGXVWU\OHDGLQJOHYHODQGLWVLQWHUQDODGPLQLVWUDWLYHHI¿FLHQF\KDVDOVREHHQLQFUHDVLQJ/RRNLQJIRUZDUGIRUWKH\HDURI
WKH%DQNZLOOFRQWLQXHWKHDOUHDG\HVWDEOLVKHGRSHUDWLRQSODQSXWIRUZDUGEXVLQHVVLQWKH*UHDWHU&KLQDDQGDFWLYHO\SURPRWH
+RQJ.RQJ%UDQFKDVZHOODVWKHOD\RXWRIWKHPDLQODQGEXVLQHVVLQRUGHUWRFUHDWHKLJKSUR¿WDQGKLJKVWDQGDUGVRITXDOLW\
DVVHWVLQDQHIIRUWWRUHZDUGHPSOR\HHVFXVWRPHUV¶WUXVWDQGVKDUHKROGHUVIRUWKHLUVXSSRUW
8
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II &RPSDQ\3UR¿OH
1.Establishment:
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EHHQQRPDWHULDOFKDQJHVWRWKHRSHUDWLRQDOPHWKRGVDQGEXVLQHVVFRQWHQWIRUWKH\HDU
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DQGVHUYLFHVLQDFRPSHWLWLYHHQYLURQPHQWWKURXJKWKHEDQNLQJV\VWHPFRPELQLQJOHDVLQJVHFXULWLHVLQVXUDQFHDQGVXFK
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10
III
III
1. Organization Chart
(1) Organization chart
March 27, 2015
Shareholders / AGM
Supervisors
Board of Directors
Internal Audit
Committee
Chairman
Honorary Chairman
Vice Chairman
Executive
Committee
Risk Management
Committee
President
President's Office
Remuneration
Committee
Management Risk Committee
Strategic
Development Team
Financial Consumer
Disputes Review Committee
Credit Review Team
Information Technology
Steering Committee
Asset & Liability Committee
Trust Asset Evaluation
Committee
Board Office
Loan Review Committee
Audit Office
Human Resources &
Personnel Committee
Business Continuity
Planning Committee
Management Committee
Wealth
Management
& Channel
Division
12
Consumer
Banking
Division
Retail Banking
Operational
Division
Wholesale
Banking
Group
Financial
Market
Division
Financial
Risk
Management Management
Division
Group
Information
&
Technology
Division
Human
Resources
Department
Administration Compliance
Department Department
Legal
Office
(2) Operations of Departments
%RDUG2I¿FH
Responsible for matters pertaining to shareholders / AGM, the Board
of Directors, and the affairs of the four Board committees, the Strategic
Development Team and Credit Review Team.
$XGLW2I¿FH
Responsible for the audit of all departments and business units according
to "The Implementation Rules for Banks' Internal Audit and Internal Control
System".
3UHVLGHQW
V2I¿FH
Responsible for external relation with competent authorities assisting the
President in drafting and monitoring the execution of overall business
strategy; to resolve abnormal situations and manage bank-wide user ID.
:KROHVDOH%DQNLQJ*URXS
Responsible for the development of the institutional, corporate and enterprise
banking business, including business development, product planning,
FXVWRPHUVHUYLFHSUR¿WDELOLW\LPSURYHPHQWDQGULVNDVVHWTXDOLW\FRQWURO
:HDOWK0DQDJHPHQW&KDQQHO'LYLVLRQ Responsible for the development of the wealth management, product
SODQQLQJFKDQQHORSHUDWLRQRIEUDQFKDQGSUR¿WDELOLW\HQKDQFHPHQW
&RQVXPHU%DQNLQJ'LYLVLRQ
Responsible for the development of the house loans, unsecured loans and
credit card business, and product planning, profitability enhancement, and
DVVHWTXDOLW\FRQWURO
5HWDLO%DQNLQJ2SHUDWLRQDO'LYLVLRQ
Responsible for the overall management of the Bank's working standards,
ORJLVWLFDO RSHUDWLRQV DQG TXDOLW\ FRQWURO$OVR UHVSRQVLEOH IRU HIIHFWLYHO\
HQKDQFLQJ RSHUDWLQJ FDSDFLW\ DQG TXDOLW\ LQ RUGHU WR UHGXFH RSHUDWLRQDO
costs, developing Bank-wide automated operation plans, and managing and
GHYHORSLQJEDFNRI¿FHRSHUDWLRQV
)LQDQFLDO0DUNHW'LYLVLRQ
Responsible for financial products marketing, capital allocation, foreign
currency exchange, derivatives trading, fixed-income product trading,
and other long- and short-term investments, as well as implementing the
decisions of the Asset and Liability Committee (ALCO).
)LQDQFH0DQDJHPHQW'LYLVLRQ
Responsible for the Bank's accounting matters, including stipulating
accounting policy and regulations, and bank-wide budgeting and underwriting
spending.
5LVN0DQDJHPHQW*URXS
Responsible for identifying, measuring, communicating, and monitoring the
Bank's credit risks, market risks, operational risks, and the credit risks of
issuers and transaction counterparties.
,QIRUPDWLRQ7HFKQRORJ\'LYLVLRQ
Responsible for the development, design, and maintenance of the Bank’s
IT application systems and e-commerce system, the establishment of the
information technology infrastructure, as well as the planning and managing
Data Center and internet banking and the study of information safety policies.
+XPDQ5HVRXUFH'HSDUWPHQW
Responsible for the development of personnel policy including hiring,
retention, training, job transfer, laying-off, compensation, rewards and
disciplining of bank-wide personnel.
$GPLQLVWUDWLRQ'HSDUWPHQW
Responsible for the bank-wide general administration, purchasing,
construction, maintenance, property management, outsourcing, banking site
security, and occupational safety and health programs, etc.
&RPSOLDQFH'HSDUWPHQW
In charge of setting up a clear system of delivering, consulting, coordinating
and communicating regulations; to ensure all kinds of operations and
management rules have been in compliance with latest laws; to stipulate
FRPSOLDQFH DVVHVVPHQW FRQWHQWV SURFHGXUHV WR VXSHUYLVH HDFK XQLW LQ
conducting self-assessment.
/HJDO2I¿FH
Providing legal consultancy and opinions; to review and draft legal
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13
III
2. Directors, Supervisors, President, Senior Executive Vice Presidents, Executive Vice
Presidents, Department Heads and Branch Managers
(1) Directors & Supervisors
February 28, 2015
Title
Nationality
and
Registry
Name
Date of
Date of Initial
Term
Appointment
Appointment
Shares held upon
Appointment
Shares
Chairman
Taiwan
Fonbao
Financial
Management Ltd.
Rep.:
Chien-Ping
Chen
Ratio
Vice
Chairman
Director
Director
Director
Hong
Kong
Taiwan
Taiwan
Kwang Yang
Motor Co. Ltd.
Rep.:
Peng Rong Lin
Ching Yuan
Investment Co.,
Ltd. Rep.:
Shu-Hui Huang
Chen
Hong Guang
Investment Co.,
Taiwan /WG5HS
Yu-Feng Ko
3 yrs
Hong
Kong
Pei Kang Limited.
Rep.:
Alex Ying
10,977,675
0.40
0.00
Private
placement
preferred 0.00
shares
295
Private
placement
preferred
shares
295
Private
placement
common
shares
3
2013.06.10
3 yrs
2007.10.31
14
Taiwan
Pei Kang
Limited.
Rep.:
Sheau-Jin Lee
0.00
Spouse
0.00
947
0
0
3 yrs
222,480,000 9.13
255,896,496
9.24
0
0
Master of Financial Management,
0 California State University; President of
Polyvest Bills Finance Corp.; Legislator.
Note 1
Director
0
East Asian Studies, Princeton
University, USA;
Director of Kbro Company and Eastern
0
Broadcasting Co., Ltd.;
Director President of The
Carlyle Group.
Note 2
N/A
N/A
N/A
0
MBA, National Kaohsiung First
University of Science;
0 Manager of Kwang Yang Motor Co.
Ltd.;
President of Kwang Yang, Philippines.
Note 3
N/A
N/A
N/A
0
Tainan Girls' Senior High School;
Chairman of Ching Yuan Investment
Co., Ltd.; Chairman of He Lian
Investment Co., Ltd.; Director at Hsin
0 Kao Gas Co., Ltd. previously held
position as YWCA chairman, chairman
of International Women’s club,
Executive Director of Tainan Corporate
Bank
Note 4
Chairman
0
Stanford Electrical Engineering,
EMBA degree from National
Cheng Chi University.
0
Managing Director of CC
Media Technology Company.
Chairman of Chi Qua Co., Ltd.
Note 5
N/A
N/A
N/A
0
MBA, University of California, Los
Angeles; Expert of Investment Bank of
CIBC Oppenheirmer;
0 Analyst of Acquisition Dept. and Asset
Management Dept. of Colony Capital;
Director President of The Carlyle
Group.
Note 6
N/A
N/A
N/A
0
MBA, University of California, Los
Angeles;
Managing Director of Corporate
Banking, Bank of America, Taiwan;
0
Vice President and Director of
HannStar Display;
CFO of Taiwan High Speed
Rail.
Note 7
N/A
N/A
N/A
2013.03.11
2013.06.10
3 yrs 1992.01.16
29,469,444 1.21
33,895,753
1.22
0
0
2001.06.28
2013.06.10 3 yrs
42,469,267 1.74
123,103,015
4.45
0.00
Private
placement
preferred 0.00
shares
295
Private
placement
preferred
shares
295
Private
placement
common
shares
3
Private
placement
preferred
shares
295
Private
placement
common
shares
3
0.00
0
0
2013.06.10
2013.06.10
3 yrs
2007.10.31
2013.06.10
3 yrs
2010.06.29
Private
placement
preferred
0.00
shares
295
0.00
0.00
0
0
0
0
Spouse or other chiefs,
Posts
concurrently directors, or supervisors with
2nd degree of kinship
held in other
companies
Title
Name Relation
0
1995.03.30
2013.06.10
Educational Attainment Work
Experience
Shares Ratio Shares Ratio
1995.03.30
(Note)
2013.06.10
Director
Ratio
9,544,145 0.39
2013.06.10
Director
Shares
2013.06.10
2013.06.10
2013.06.10
Pei Kang
Limited.
Rep.:
Gregory
Zeluck
Shares held by
Shares held
Spouse / Minor
Shares held at Present
in the name
Children at
of Others
present
Shu-Huei
Mother
Huang
and son
Chen
Chien-Ping Mother
Chen and son
February 28, 2015
Title
Nationality
and
Registry
Name
Date of
Date of Initial
Term
Appointment
Appointment
Shares held upon
Appointment
Shares
Ratio
Director
Independent
Director
Independent
Director
U.S.A
Taiwan
Taiwan
Taiwan
Pei Kang
Limited. Rep.:
Sunil Kaul
Pei Kang Ltd.
Rep.:
Lin Sen Chen
Joseph Fan
Joseph Tung
2013.06.10
3 yrs
2008.09.16
2013.06.10
2013.06.10
2013.06.10
3 yrs 2013.06.10
3 yrs 2007.10.31
3 yrs 2007.10.31
Shares
Ratio
0.00
Private
placement
preferred 0.00
shares
295
Private
placement
preferred
shares
295
Private
placement
common
shares
3
0.00
Private
placement
preferred 0.00
shares
295
Private
placement
preferred
shares
295
Private
placement
common
shares
3
2013.06.13
Director
Shares held by
Shares held
Spouse / Minor
Shares held at Present
in the name
Children at
of Others
present
0
0
0
0
0
0
0.00
0.00
0
0
Educational Attainment Work
Experience
Shares Ratio Shares Ratio
0
0
0
0
0
0
0
0
Spouse or other chiefs,
Posts
concurrently directors, or supervisors with
2nd degree of kinship
held in other
companies
Title
Name Relation
0
Post graduated program in
Management, Indian Institute of
Science; Senior Director of The Carlyle
0 Group; President/Chairman of Citibank
(Japan); Manager of Consumer
Banking and Emerging Enterprises of
Citibank (Asia).
Note 8
N/A
N/A
N/A
0
MBA from National Taipei University.
Served in Taxation Bureau,
Compliance Bureau, and Treasure
0
Administration of Ministry of Finance.
President of Joint Credit Information
Center.
Note 9
N/A
N/A
N/A
0
University of Southern California;
Chairman of Fu Ling Cultural
Foundation; President and CEO of
Taiwan Fixed Network; Chairman and
0
President of Win TV Broadcasting Co.,
Ltd.; President of Taiwan Mobile Co.,
Ltd.; Vice Chairman and CEO of Kbro
Co., Ltd.
Note 10
N/A
N/A
N/A
0
Economics, National Chengchi
University; MBA, University of
0 Southern California. Vice President of
Corporate Banking, Citibank, Taipei
branch; Director of The ASE Group.
Note 11
N/A
N/A
N/A
Note 12
N/A
N/A
N/A
Independent
Director
Taiwan
Ming-Hsin Kung
2013.06.10
3 yrs 2007.06.12
0
0
0
0
0
0
0
Master of Economics, NTU; Ph.D. of
Economics, National Chung Hsing
University; Vice Director of the Taiwan
Institute of Economics Researcher and
Advisor to the Executive Yuan;
0
Assist. Professor at National Central
University. Executive Yuan Council for
Economic Planning And Development
Member; Member to Academia Sinica,
Advisor to MOEA.
Independent
Director
Taiwan
Cheng Young Kao
2013.06.10
3 yrs 2013.06.10
0
0
0
0
0
0
0
0
MBA from University of Baltimore.
Manager at JP Chase. President of
Hong Leong Group (of Singapore) in
Taiwan.
Note 13
N/A
N/A
N/A
0
Dept. of Business of the National
Chengchi University; MBA,
Pennsylvania State University;
Senior Executive Vice President at
0 the Capital Securities Group; Senior
Vice President of American Express
Taiwan (Taipei Branch); Vice President
of JPMorgan Chase Taiwan (Taipei
Branch).
Note 14
N/A
N/A
N/A
0
Graduate School of Management,
Tamkang University; President of
Polyrest Bills Finance Corp.;
0
Vice President of Ta Chong Bank;
Director and President of China Bills
Finance Corp.
Note: 15
N/A
N/A
N/A
2013.06.10
Supervisor
Taiwan
Bo Wei Ltd.
Rep.:Sue Ho
2013.06.10
3 yrs
Private
Placement
0.00
Common
Shares236
2007.10.31
Supervisor
Taiwan
Qin Yu Investment
Co., Ltd.
Rep.: Thomas Lee
2013.06.10
3 yrs 2007.10.31
4,204,872 0.17
Private
Placement
Common
shares
271
4,836,443
0.00
0.17
0
0
0
0
1RWH&KLHQ3LQJ&KHQaWLOOSUHVHQW
15
III
Duties at the Bank and Other Companies
Name
Company Name
1RWH&KLHQ3LQJ&KHQ
Ta Chong Commercial Bank Co., Ltd.
Ta Chong Commercial Bank Executive Committee
Ta Chong Commercial Bank Strategic Development Team
Ta Chong Commercial Bank Credit Review Team
Ta Chong Commercial Bank Risk Committee
Lian Zhong Investment Co., Ltd.
Hua Jing Venture Capital Corp.
Feng Bao Development and Construction Co., Ltd.
He Lian Investment Co., Ltd.
He Xing Construction Co., Ltd.
Ichia Technologies, Inc.
Qing Tian Investment Co., Ltd.
Ching Yuan Investment Co., Ltd.
My Humble House Hospitality Management Consulting Co. Ltd.
Feng Bao Financial Management and Consultation Co., Ltd.
Chairman
Convener
Strategy Leader
Strategy Leader
Convener
Director
Director
Supervisor
Director
Director
Supervisor
Director
Director
Director
Director
1RWH*UHJRU\=HOXFN
Kbro Co., Ltd.
Sheng Ting Co., Ltd.
Sheng Hao Co., Ltd.
Eastern Broadcasting Co., Ltd.
Huei Yao Investment Co., Ltd.
Natural Beauty Bio-Technology Ltd.
Vice Chairman
Committee member
Member
Vice Chairman
Vice Chairman
Vice Chairman
Director
Director
Director
1RWH3HQJ5RQJ/LQ
Kwang Jet Co.,Ltd.
Kwang Xin Co.,Ltd.
Committee member
Chairman
Director
1RWH6KX+XHL+XDQJ&KHQ
Lian Zhong Investment Co., Ltd.
He Sheng Construction Co., Ltd.
Feng Bao Development and Construction Co., Ltd.
Xin Gao Gas Co., Ltd.
Committee member
Supervisor
Director
Director
Chairman
Chairman
Supervisor
Director
Director
Hong Guang Investment Co., Ltd.
Chi Qua Co., Ltd.
Lae Ya Co., Ltd.
Tau lan Investment Co., Ltd.
Tau Ji Investment Co., Ltd.
Tau Jin Investment Co., Ltd.
Tau Guan Investment Co., Ltd.
Tau Mai Investment Co., Ltd.
Kwang Yang Motor Co., Ltd.
Chon Da Investment Co., Ltd.
Xin Seng Investment Co., Ltd.
CCMedia Technology Company.
Ming Feng Investment Co., Ltd.
Tau Jin Technology Co., Ltd.
Tau Mai Technology Co., Ltd.
Tau Guan Technology Co., Ltd.
Tau Ji Technology Co., Ltd.
Tau lan Technology Co., Ltd.
Committee member
Member
Supervisor
Chairman
Chairman
Director
Director
Director
Director
Director
Director
Director
Supervisor
Director
Director
Director
Director
Director
Director
Director
1RWH<X)HQJ.R
16
Title / Responsibilities
Duties at the Bank and Other Companies
Name
Company Name
1RWH$OH[<LQJ
Title / Responsibilities
Zhong Xin Co., Ltd.
Zhong Xi Co., Ltd.
Wei Yu Co., Ltd
Wei Qi Co., Ltd.
Wei Mao Co., Ltd.
Zhong Huan Co., Ltd.
Super Communications Inc.
Shihua North American Development Co., Ltd.
Sheng Ting Co., Ltd.
Sheng Hao Co., Ltd.
Kbro Co., Ltd.
Committee member
Committee member
Member
Member
Chairman
Chairman
Vice Chairman
Chairman
Chairman
Chairman
Chairman
Chairman
Chairman
Director
Director
Director
1RWH6KHDX-LQ/HH
Committee member
Committee member
Member
1RWH6XQLO.DXO
Zhong Xi Co., Ltd.
India Infoline Limited
Committee member
Committee member
Director
Director
1RWH/LQ6HQ&KHQ
Chong Yue Technology Co., Ltd.
Lin Sen Legal Consulting Firm
Committee member
Committee member
Independent Director
Executive Shareholder
1RWH-RVHSK)DQ
Ta Chong Commercial Bank Internal Audit Committee
Ta Chong Commercial Bank Remuneration Committee
Wei Yu Co., Ltd.
Wei Qi Co., Ltd.
Qi Xiang Investment Co., Ltd.
Committee member
Committee member
Chairman
Director
Director
Director
1RWH-RVHSK7XQJ
ASE Test, Inc.
8QLYHUVDO6FLHQWL¿F,QGXVWULDO&R/WG
Advanced Semiconductor Engineering, Inc.
ASE Electronics, Inc., Ltd.
TLJ Intertech Inc.
-5,QGXVWULDO,QF
8QLYHUVDO6FLHQWL¿F,QGXVWULDO&R/WG
Lu Zhu Development Co., Ltd.
USI (Shanghai) Co., Ltd.
Ya Tai Venture Capital
Yaun Long Electric Co., Ltd.
Claridy Solutions, Inc.
Convener
Committee member
Supervisor
Supervisor
Director
Director
Director
Director
Supervisor
Director
Director
Director
Director
Director
1RWH0LQJ+VLQ.XQJ
UBright Optronics Corporation
Convener
Committee member
Committee member
Committee member
Committee member
Member
Committee member
Member
NPIC Cayman Company
Golden Biotechnology Corp.
DaAn Biotechnology Co., Ltd.
Supervisor
1RWH&KHQJ<RXQJ.DR
1RWH6XH+R
1RWH7KRPDV/HH
17
III
Table 1: Major Shareholders of Institutional Shareholders
Institutional Shareholder
18
Major Shareholders
Shareholding ratio
Feng Bao Financial Management
and Consultation Co.,Ltd.
Chien-Ping Chen
Hsiu-Ling Wei
Ching-Li Chen
Kuan-Cheng Chen
Pei Kang Limited.
Netherlands-based Cooperative Meadowstream Investment W.A.
Xin Sheng Investment Co., Ltd.
Guang Zhou Investment Co., Ltd.
Da Ming Investment Co., Ltd.
Guang Xing Industrial Co., Ltd.
Qing Yang Investment Co., Ltd.
Yu Ji Investment Co., Ltd.
Hsiao-Hsiung Ko
Hung Sheng Investment Co., Ltd.
Hung-Ming Ko
11.31%
6.66%
6.54%
4.68%
2.85%
1.34%
1.21%
1.07%
1.03%
46.32%
Shu-Yuan Wang Ko
Hung-Ming Ko
Sheng-Feng Ko
Yu-Feng Ko
Kuang-Feng Ko
Po Wei Limited.
Netherlands-based Cooperative Silverdale United Enterprise W.A.
Qin Yu Investment Co., Ltd.
Wei-Lien Yeh
Ming-Kuei Chen
Yi-Chu Chen
Chia-Lin Tsai
Min-Tse Hsieh
Lung-Hsing Chen
Shui-Chin Sun
Jui-Yueh Chen
44.71%
44.71%
4.16%
6.41%
100%
20%
20%
20%
20%
20%
100%
4.76%
4.76%
23.81%
Table 2: Major shareholders of Table 1 Major Shareholders that are Institutions
Institutional Shareholder
Major Shareholders of the Institutional Shareholder
Shareholding Ratio
Note
Netherlands-based Cooperative Meadowstream
Investment
Andrease-based TCB Investment (Antilles) I N.V.
Ming Feng Investment Co., Ltd.
Revolving Investment Co., Ltd.
Xin Qing Investment Co., Ltd.
18.83%
Shu-Yuan Wang Ko
Hung-Ming Ko
Sheng-Feng Ko
Yu-Feng Ko
Kuang-Feng Ko
Guang Zhou Investment Co., Ltd.
Wen-Tan Ko
Chen-Shian Ko
Ching-Hui Ko
Shin Tung Investment Co., Ltd.
Ju An Investment Co., Ltd.
Jun-Ming Ko
Jing-Huei Ko
Mei-Huei Ko
Jun-Nan Ko
Sin Yu Li Investment Co., Ltd.
0.50 %
0.06 %
5.73%
5.41 %
7.74 %
4.51 %
0.53%
0.00 %
0.76 %
0.76 %
7.70 %
(Note)
Da Ming Investment Co., Ltd.
Chung-Hsiung Ko
Jon-Chia Ko
Hsiao-Hsiung Ko
Chia-Nan Ko
5.10 %
5.48 %
5.73%
(Note)
Qing Yang Investment Co., Ltd.
Chao-Hsai Lu Chen
Ching-Nan Chen
Wei-Zhi Chen
7.57 %
43.84 %
1.40 %
(Note)
Wen-Fa Ko
Chun-Pin Ko
Chun-Sung Ko
Chun-Yan Ko
12.44 %
24.00 %
24.00 %
23.44%
(Note)
Hung Sheng Investment Co., Ltd.
Hui-Min Ko
Hsiu-Man Ko
Chia-Hsiun Ko
Hsiun-Chu Ko
11.11%
(Note)
Tong De Investment Co., Ltd.
Shu-Hui Huang Chen
Tien-Mao Chen
44.46%
5.33%
44.45%
44.45%
Qing Tian Inv. Co., Ltd.
44.73%
Netherlands-based Cooperative
Silverdale United Enterprise W.A.
Silverdale Resources. I N.V.
100%
20%
20%
20%
20%
20%
100%
1RWH%DVHGRQWKHGDWDIURP&RPPHUFH,QGXVWULDO6HUYLFHV3RUWDO0LQLVWU\RI(FRQRPLF$IIDLUV52&
19
III
(2)Directors and Supervisors' Professional Qualifications and Independence Analysis
Terms
5 or more years of work experience and one of the following
SURIHVVLRQDOTXDOL¿FDWLRQV
Compliance with Independency (Note)
An instructor
or higher in a
department
of commerce,
ODZ¿QDQFH
accounting, or
other academic
department
related to the
business needs
of the company
in a public or
private junior
college, college,
or university
A judge, public
prosecutor,
attorney,
FHUWL¿HGSXEOLF
accountant, or
other professional
or technical
specialist who
has passed
a national
examination and
been awarded
DFHUWL¿FDWHLQ
a profession
necessary for the
business of the
company
Have work
experience
in the area of
commerce,
ODZ¿QDQFH
or accounting,
or otherwise
necessary for the
business of the
company
1
Chien-Ping Chen
No
No
Yes
9
Gregory Zeluck
No
No
Yes
9
9
9
Peng Rong Lin
No
No
Yes
9
9
9
Shu-Hui Huang Chen
No
No
Yes
9
9
Yu-Feng Ko
No
No
Yes
9
9
Alex Ying
No
No
Yes
9
Sunil Kaul
No
No
Yes
Sheau-Jin Lee
No
No
Lin-Sen Chen
No
Joseph Fan
5
6
7
9
9
9
9
9
9
9
9
9
9
9
9
9
9
9
9
9
9
9
Yes
9
9
9
Yes
Yes
9
9
9
No
No
Yes
9
9
Joseph Tung
No
No
Yes
9
Ming-Hsin Kung
Yes
No
Yes
Cheng-Young Kao
No
Yes
Sue Ho
No
Thomas Lee
No
Name
2
3
4
8
10
Number
of publicly
listed
companies
in which the
shareholder
concurrently
serves as an
independent
director
9
0
9
9
0
9
9
0
9
0
9
9
0
9
9
9
0
9
9
9
9
0
9
9
9
9
9
0
9
9
9
9
9
9
1
9
9
9
9
9
9
9
9
0
9
9
9
9
9
9
9
9
9
0
9
9
9
9
9
9
9
9
9
9
1
Yes
9
9
9
9
9
9
9
9
9
9
0
No
Yes
9
9
9
9
9
9
9
9
1
No
Yes
9
9
9
9
9
9
9
9
1
9
1RWH7KHGLUHFWRURUVXSHUYLVRUPHHWVWKHIROORZLQJFKHFNHGWHUPVWZR\HDUVSULRUWRHOHFWLRQDQGGXULQJKLVRUKHUWHUPSHULRG
1RWDQHPSOR\HHRIWKH%DQNRULWVDI¿OLDWHGHQWHUSULVHV
1RW D GLUHFWRU RU VXSHUYLVRU RI WKH %DQN RU LWV DI¿OLDWHG HQWHUSULVHV 7KLV UHVWULFWLRQ GRHV QRW DSSO\ WR LQGHSHQGHQW GLUHFWRUV RI WKH %DQN LWV SDUHQW
company, or a subsidiary of which the Bank directly or indirectly holding more than 50% of voting shares)
(3) Not a natural person shareholder who holds shares, together with those held by the person's spouse, minor children, or held by the person under others'
names, in an aggregate amount of one percent or more of the total number of issued shares of the company or ranking in the top 10 shareholders.
1RWDVSRXVHUHODWLYHZLWKLQWKHVHFRQGGHJUHHRINLQVKLSRUOLQHDOUHODWLYHZLWKLQWKH¿IWKGHJUHHRINLQVKLSRIDQ\RIWKHSHUVRQVLQWKHSUHFHGLQJWKUHH
conditions.
1RW D GLUHFWRU VXSHUYLVRU RU HPSOR\HH RI D FRUSRUDWH VKDUHKROGHU WKDW GLUHFWO\ KROGV ¿YH SHUFHQW RU PRUH RI WKH WRWDO QXPEHU RI LVVXHG VKDUHV RI WKH
FRPSDQ\RUWKDWKROGVVKDUHVUDQNLQJLQWKHWRS¿YHVKDUHKROGHUV
1RWDGLUHFWRUVXSHUYLVRURI¿FHURUVKDUHKROGHUKROGLQJ¿YHSHUFHQWRUPRUHRIWKHVKDUHVRIDVSHFL¿HGFRPSDQ\RULQVWLWXWLRQWKDWKDVD¿QDQFLDORU
business relationship with the company.
(7) Not a professional individual , or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that,
provides commercial, legal, financial, accounting services or consultation to the company or to any affiliate of the company, or a spouse thereof, not
LQFOXGLQJUHPXQHUDWLRQFRPPLWWHHPHPEHUVZKRDUHHQJDJHGRISHUIRUPLQJWKHRI¿FLDOSRZHUVE\$UWLFOHLQDFFRUGDQFHZLWK³5HJXODWLRQV*RYHUQLQJWKH
Appointment and Exercise of Powers by the Remuneration Committee of a Company Whose Stock is Listed on the Stock Exchange or Traded Over the
Counter.”
(8) Not a spouse or relative within the second degree of kinship of any of the Bank's directors
'RHVQRWPHHWDQ\RIWKHWHUPVDVSURYLGHGE\$UWLFOHRIWKH&RPSDQ\$FW
(10) Not elected in the capacity of the government, a juristic person, or a representative thereof, as provided in Article 27 of the Company Act.
20
(3) President, Senior Executive Vice Presidents, Executive Vice Presidents,
Department Heads, and Branch Managers
Title
Nationality
and
Registry
Name
Date of
Appointment/
Employment
Shares
President
Taiwan Justin Tsai
2011.12.15
Shares held by Spouse
and Minor Children
Shares held
1,836,434
Shareholding
Ratio
0.07
Shares held in the Name
of others
Educational Attainment & Work
Experience
Shareholding
Shareholding
Shares
Ratio
Ratio
Shares
0
0
Unit: share; %
February 28, 2015
Post held President, SEVP, or EVP
concurrently within 2 Degrees of Kinship
at other
companies Title Name Relation
0
MBA, Indiana University; Over 30 years
of service at the Bank of America, UBS,
0 Deutsche Bank, TC Bank, and Taishin
Bank, and currently has been with TC
Bank for over 3 years.
Note 1
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Chief Auditor
Taiwan
Ming-Hsiu
Tsai
2011.06.07
1,479,976
0.05
0
0
0
MBA, National Chung Hsing University
and FRM certified; Over 23 years of
service at TC Bank, serving as Head
of Risk Management, Executive Vice
President responsible for Basel II
0 planning and implementation, Market
5LVNV0DQDJHPHQWDQG¿QDQFLDODIIDLUV
division supervision, as well as audit
department manager, head of Credit
Underwriting, General Branch Business
and OBU Credit Businesses.
Senior Executive Vice
President / Head of the Board
RI'LUHFWRUV¶2I¿FH
Taiwan
Ya-Ping
Zhuang
2011.04.01
653,622
0.02
0
0
0
0
MBA, Northrop University, USA; Served
over 11 years at the Bankers' Association
of the ROC, and currently has been with
TC Bank for over 10 years.
Note 2
N/A
N/A
N/A
Taiwan
Charles
Hsieh
0
MBA, University of Iowa; Over 18 years
of service at Banque Pribas, Bank of
0 America, JPMorgan Chase Bank and
Taishin Bank, and currently has been
with TC Bank for over 3 years.
Note 3
N/A
N/A
N/A
Taiwan
Niel
Chang
0
MBA, National Taiwan University; Over
20 years at China Development Bank,
0 Bank of America, ABN AMRO, and
N/A
N/A
N/A
N/A
0
MBA, California State University;
Over 29 years of service at ING Bank
N.V., HSBC HK, UBS, Ta Chong
0
Bank, Taishin, and DBS (Taiwan), and
currently has been with TC Bank for
over 2 years.
Note 4
N/A
N/A
N/A
0
MBA, University of Oregon; Over 30
years of service at Central Bank, First
Bank (Seattle), Westpac Banking
0
(Tokyo, HK, Taipei Branch), UBS and
Taishin Bank , and currently has been
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
University of San Diego;
Over 30 years with First Trust, Citibank
and Taishin Bank, and currently has
been with TC Bank for over 2 years.
N/A
N/A
N/A
N/A
Note 5
N/A
N/A
N/A
N/A
N/A
N/A
N/A
President / Head of the
Wholesale Banking Group
President / Head of the
Financial Marketing Division
President / Head of the Risk
Management Group
President / CFO and Head
of Financial Management
Division
Taiwan
Leon Kuo
2012.04.01
2012.03.03
2012.04.02
507,905
928,954
313,921
0.02
0.03
0.01
0
0
0
0
0
0
Taiwan
Loo-Fei
Huang
President / Head of
Compliance Dept.
Taiwan
Kevin
Chen
2014.02.10
406,696
0.01
0
0
0
Dept. of Land Economics, National
Chung Hsing University; Over 8 years
0 with Hua Nan Bank and OCBC Bank;
currently has been with TC Bank for
over 22 years.
President / Head of Retail
Banking Operational Division
Taiwan
Ena Suei
2012.05.02
136,539
0.00
0
0
0
0
2012.04.26
305,175
0.01
0
0
President / Head of Wealth
Management & Channel
Division and Distribution
Channels Dept.
Taiwan
Victor
Chen
2014.02.10
313,321
0.01
0
0
0
Department of Economic, Chinese
Culture University; Over 22 years
with Citibank, ABN AMRO, American
0
Express, Jihsun Bank, and Cosmos
Bank, and currently has been with TC
President / Head of Consumer
Banking Division and
Unsecured & Credit Card Dept.
Taiwan
Indra
Huang
2014.02.10
1,966,030
0.07
Spouse
67,290
0.00
0
0
BA, National Cheng Gung University;
14 years of service with IBFC and TC
Bills; currently has been with TC Bank
for over 13 years.
21
III
Unit: share; %
February 28, 2015
Title
Nationality
and
Registry
Name
Date of
Appointment/
Employment
Shares
Senior Executive Vice President
/ Head of WB Credit Risk Mgt.
Taiwan
Division
President / Head of CBD 2
Executive Vice President /
%RDUGRI'LUHFWRUV¶2I¿FH
Head of IT Division
Kris Hung
2014.02.10
and Minor Children
Shares held
1,056,072
Shareholding
Ratio
0.04
of others
Experience
Shareholding
Shareholding
Shares
Ratio
Ratio
Shares
0
0
at other
0
0
MBA, University of Glasgow; Over 20
years with TC Bank.
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Note 6
N/A
N/A
N/A
Taiwan
John
Chou
2012.04.02
321,255
0.01
0
0
0
Master of Management Science,
National Chiao Tung University; Over
0 29 years of service with Mega Bank
and Taishin Bank. Currently has been
Taiwan
Eileen
Wei
2014.01.01
1,582,839
0.06
0
0
0
0
0
Computer Science and Information
Major, National Taipei University of
Business; Over 14 years of service with
0
Taishin Bank and Taishin Bills Finance
Corp., and currently has been with TC
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Taiwan
Johnson
Chang
2012.04.01
169,229
0.01
0
0
Department of Financial Management.,
University of Southern California; Over
5 years with TC Bills, currently has
Head of TMU Dept.
Taiwan
Joe Chou
2012.04.01
398,572
0.01
0
0
0
MBA, Lake Superior State University;
Over 13 years of service with Chase
Manhattan, Credit Agricole CIB,
0
American Express, and Morgan Stanley.
currently has been with TC Bank for over
3 years.
Executive Vice President / WB
Credit Risk Mgt. Division
Taiwan
Terry Tsai
2012.04.01
129,155
0.00
Spouse
172
0.00
0
0
MBA, National Chiao Tung University;
Over 20 years of service with TC Bank.
N/A
N/A
N/A
N/A
Head of CBD 1
Taiwan Vincent Lai
2012.04.01
633,193
0.02
0
0
0
0
MBA, Chinese Culture University; Over
23 years of service with TC Bank
N/A
N/A
N/A
N/A
Head of Wealth Management
Dept.
Taiwan
Anna Wu
2014.02.10
134,112
0.00
0
0
0
0
Department of English Language and
Literature, Soochow University; Over 11
years with Taishin Bank, and currently
has been with TC Bank for over 1 year.
N/A
N/A
N/A
N/A
Financial Management
Division
Taiwan
Edward
Tyane
2011.01.26
725,634
0.03
0
0
0
0
Master of Accountancy, National Cheng
Gung University; Over 5 years with
Deloitte & Touche; currently has been
with TC Bank for over 15 years
Note 7
N/A
N/A
N/A
+HDGRIWKH3UHVLGHQW
V2I¿FH
Taiwan Tracy Chu
2012.02.15
263,953
0.01
0
0
0
0
MBA, Cornell University;
Over 8 years with Citibank, Bank of
America, and ABN AMRO; Currently
with TC Bank for 7 years.
Note 8
N/A
N/A
N/A
Head of Management Dept.
Taiwan
Han-Qing
Chang
2014.08.01
123,079
0.00
0
0
0
0
Phd of Zhongshan University; Over 6
years of service with TC Bank.
N/A
N/A
N/A
N/A
0
Dept. of Insurance, Tamkang University;
Over 14 years of service with ABN
AMRO, Industrial Bank of Taiwan, Bank
0
of Taipei, ING, First Bank of Taiwan, and
Yuanta Holdings. Currently has been
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Department of Agriculture Business,
National Taiwan University; Over 9 years
with AIA credit card. Currently has been
N/A
N/A
N/A
N/A
Head of Trading Dept.
Taiwan
Milly Chen
2012.04.01
212,786
0.01
0
0
TMU Dept.
Taiwan
Rita Liang
2012.04.01
284,643
0.01
0
0
0
Ming Chuan University;
Over 18 years with HSBC, ABN AMRO,
0 Taishin, and Credit Agricole CIB;
Currently has been with TC Bank for
over 9 years.
Head of RB Credit
Management Division
Taiwan
Jia-Yu Li
2014.06.20
169,754
0.01
0
0
0
0
22
Unit: share; %
February 28, 2015
Title
Nationality
and
Registry
Name
Date of
Appointment/
Employment
Shares
Head of CollectionDivision
Head of WB Product Marketing
Division
Head of Enterprise Banking
Division
(EBD)
Taiwan
Erh-Ke
Tung
Taiwan
ShaoHung
Wu
2014.02.10
2012.04.01
and Minor Children
Shares held
128,350
122,642
Shareholding
Ratio
0.00
0.00
of others
Experience
Shareholding
Shareholding
Shares
Ratio
Ratio
Shares
0
0
0
0
0
0
Industrial Management Institute, National
Taiwan University of Science and
Technology; Over 21 years of service
with TC Bank.
at other
N/A
N/A
N/A
N/A
0
Dept. of International Trade, Fu Jen
Catholic University; Over 16 years
0 with Chailease Finance, TC Bank, and
N/A
N/A
N/A
N/A
0
Dept. of Business Administration,
National Taiwan University; Over 17
years with Chailease Finance,Taishin
0
Bank, TC Bank and Fubon Bank, and
2 years.
N/A
N/A
N/A
N/A
0
Dept. of Economics, Chengchi
University; Over 23 years with Esun
0 Bank, TC Bank, and Taishin Bank, and
2 years.
N/A
N/A
N/A
N/A
0
Dept. of Tourism, Chinese Culture
University; Over 24 years of service with
0 Chinfon Bank, Chung Hsing Bank, and
King's Town Bank; Currently has been
with TC Bank for 6 years.
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Taiwan
Peter
Chiou
Taiwan
Pei-Chen
Tsai
Taiwan
Shi-Fang
Xu
CBD 2
Taiwan
Yong-Chi
Wang
2015.01.01
163,135
0.01
0
0
0
Department of Business Management,
Cheng Kung University; Over 7 years of
0 service with Chailease Finance Co., Ltd,
and ING Bank; Currently has been with
TC Bank for 12 years.
Head of Customer Relationship
Dept.
Taiwan Terry Gung
2013.07.01
397,545
0.01
Spouse
6,481
0.00
0
0
Business Administration, National Chung
Hsing University; Over 9 years with
Kaohsiung Business Bank; Currently
has been with TC Bank over 18 years.
N/A
N/A
N/A
N/A
Distribution Channels Dept.
Taiwan
Eric Yang
2014.02.10
245,100
0.01
0
0
0
0
Dept. of Finance, Tamkang University;
Over 5years with Chung Hsing Bank.
currently has been with TC Bank over 17
years.
N/A
N/A
N/A
N/A
Strategic Development Team
Taiwan
Gui-Zhen
Xiao
2015.01.01
202,039
0.01
0
0
0
Department of Accounting and Statistics,
Ming Chuan College of Business;
0 Over 15 years of service with Citibank,
Standard Charter Bank, currently has
been with TC Bank over 9 years.
Note 9
N/A
N/A
N/A
Consumer Banking Division
Taiwan
Johnson
Chung
2014.02.10
38,791
0.00
0
0
0
Department of Mechanical Engineering,
0 Sun Yat-Sen University;
Over 18 years of service with TC Bank.
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Head of WB Operations
Division
CBD 2
2012.09.03
2013.04.01
2012.04.01
202,726
134,314
365,827
0.01
0.00
0.01
0
0
0
0
0
0
Consumer Banking Division
Taiwan Hsiu-Mei Li
2015.01.01
237,543
0.01
0
0
0
Department of Land, Chung Hsing
University;
0 Over 7 years of service with Hua Xin
Commercial Bank, and currently has
been with TC Bank over 15 years.
Division
Taiwan
Li-Ya Wu
2015.01.01
70,112
0.00
0
0
0
0
Department of Accounting, Tamkang
TC Bank, Taishin Bank, and currently
has been with TC Bank over 3 years.
N/A
N/A
N/A
N/A
Senior Vice President / Board
RI'LUHFWRUV¶2I¿FH
Taiwan
Wen-Hsin
Huang
2014.08.01
678,648
0.02
Spouse
118,278
0.00
0
0
EBMA, Tamkang University; Over 15
years of service with TC Bank.
N/A
N/A
N/A
N/A
Senior Vice President /
+HDGRI/HJDO2I¿FH
Taiwan
Chih-Han
Tsai
2012.07.01
40,613
0.00
0
0
0
Department of Law, Fu Jen Catholic
0 University; Over 17 years of service with
TC Bank.
N/A
N/A
N/A
N/A
23
III
Unit: share; %
February 28, 2015
Title
Nationality
and
Registry
Name
Date of
Appointment/
Employment
Shareholding
Ratio
Shares
Senior Vice President/ Head of
HR (acting)
Taiwan
Connie
Cheng
2014.05.13
and Minor Children
Shares held
86,096
0.00
of others
Experience
Shareholding
Shareholding
Shares
Ratio
Ratio
Shares
0
0
at other
0
Dept. of Business Administration,
Soochow University.
0 Over 4 years of service at ABN and
Taipei Fubon Bank and currently has
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Head of Int't Banking
Department.
Taiwan
Kuan-Lan
Chin
2013.04.18
50,688
0.00
0
0
0
Department of Banking, Tamkang
Citibank, Hua Xin Commercial Bank,
0
Chinatrust, and Standard Charter Bank;
Currently has been with TC Bank over 9
years
Head of OBUs
Taiwan
Sharon
Feng
2013.04.18
270,204
0.01
Spouse
4,737
0.00
0
Master’s Program in Finance, Fu Jen
0 Catholic University; Over 15 years of
service with TC Bank.
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Yu Mei,
Yang
2012.04.01
155,602
0.01
0
0
0
0
Daito Bunka University Department of
business
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Shu Yueh,
Lin
2014.04.23
57,629
0.00
0
0
0
0
Department of Finance and Taxation
Aletheia University
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Shu Mei,
Lin
2011.07.01
41,049
0.00
Spouse
737
0.00
0
0
Yongda Technical College Department
of Finance
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Yi Shan, Li
2013.07.19
18,448
0.00
0
0
0
0
Shu-Te University Finance and
insurance risk management
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Hui Yu, Lin
2014.07.01
2,768
0.00
0
0
0
0
Feng Chia University Department of
Land Management
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Chi Nan,
Yang
2012.02.15
69,715
0.00
0
0
0
0
Southern Taiwan Junior College BBA
Branch
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Meng
Chao Tsai
2014.04.01
23,942
0.00
0
0
0
0
Chiayi University, Department of Applied
Economics
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Ying Hsiao,
Kuo
2013.10.01
17,022
0.00
0
0
0
0
Department of Business Management at
Soochow University
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Ling Miao,
Wu
2010.02.01
40,422
0.00
0
0
0
0
Taipei University of the International
Finance
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Pao Lin,
Wang
2010.08.09
98,428
0.00
0
0
0
0
Municipal Department of Culture
University
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Chih Hui
Chang
2014.07.28
21,528
0.00
0
0
0
0 Chung Hsing University EMBA
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Chien An
Chen
2011.07.01
95,444
0.00
0
0
0
0 University of Oklahoma Qi Yansuo
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Shuen Chi
Chang
2008.12.01
0
0
0
0
0
0
Dan Sui School of International Business
and Professionals Trade Division
Note10
N/A
N/A
N/A
Branch Manager
Taiwan
Hui Li Pai
2014.10.01
66,757
0.00
0
0
0
0
Middlebury College of Business
International Trade Division
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Hsueh
Ping Yeh
2012.07.01
103,475
0.00
Underage
children
3,929
0.00
0
0
National Taiwan University of Science
and Technology Finance that.
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Su Ning
Chang
2010.02.01
83,483
0.00
0
0
0
0
Taichung Commercial College
Bancassurance Division
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Shu Hui
Chen
2013.03.01
64,887
0.00
0
0
0
0
Political Department of Soochow
University
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Yung Lung
Chan
2012.02.01
3,669
0.00
0
0
0
0
American Management University of
Science and MBA
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Ming Lu
Chang
2012.07.01
34,581
0.00
Spouse
395
0.00
0
0
Tunghai University Department of
Economics
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Ya Chang
Huang
2015.01.01
14,917
0.00
0
0
0
0 Shu-Te University Finance Dep.
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Yi Chun
Wan
2015.02.01
251,329
0.01
0
0
0
0
N/A
N/A
N/A
N/A
24
Louisiana State University, Department
of Management
Unit: share; %
February 28, 2015
Title
Nationality
and
Registry
Name
Date of
Appointment/
Employment
and Minor Children
Shares held
Shareholding
Ratio
Shares
of others
Experience
Shareholding
Shareholding
Shares
Ratio
Ratio
Shares
at other
Branch Manager
Taiwan
Chih Kang
Feng
2012.07.23
8,000
0.00
Spouse
473
0.00
0
0 ,6KRX8QLYHUVLW\¿QDQFLDOPDQDJHPHQW
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Chia Lin
Liu
2011.07.01
55,117
0.00
0
0
0
0
Feng Chia University
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Chen
Chieh Wu
2015.01.01
44,046
0.00
0
0
0
0
Fu Jen Catholic University Department
of Economics
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Pei Chen,
Chung
2013.03.01
958
0.00
0
0
0
0
Department of International Trade and
Culture University
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Fu Hsiang
Chen
2012.02.15
81,792
0.00
0
0
0
0
Tainan University of Technology
Graduate School of Business
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Te Yu
Yuang
2012.08.01
109,775
0.00
0
0
0
0
Tamkang University Department of
Insurance
Note11
N/A
N/A
N/A
Branch Manager
Taiwan
Pei Yu Wu
2012.02.15
103,636
0.00
0
0
0
0
Business documents Business and
Professionals Dan Sui school
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Chih Hung
Chou
2013.10.01
14,731
0.00
0
0
0
0
Department of Tourism and Culture
University
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Wen
Hsiang
Cheng
2011.07.01
75,170
0.00
0
0
0
0
Business and Professionals International
Trade Division Dan Sui school
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Hung Ling
Wang
2011.07.01
71,697
0.00
0
0
0
0
Heilongjiang University of Foreign Ewen
Ji
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Ya Hui
Chen
2013.08.01
23,283
0.00
0
0
0
0 8QLYHUVLW\RI<RUN¿QDQFLDOPDQDJHPHQW
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Hung
Chien Hsu
2014.10.01
101,684
0.00
0
0
0
0 University of North Texas MBA
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Chih
Hsiang
Chang
2015.01.01
70,624
0.00
0
0
0
0
Department of Business Success
University
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
He Lun,
Luan
2014.05.16
0
0
0
0
0
0
That the new work designed chemical
engineering department
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Ya Chin
Lin
2014.08.01
21,654
0.00
0
0
0
0
Feng Chia University
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Shu
Chuang
Chan
2014.05.01
29,801
0.00
0
0
0
0 Dallas Baptist University of Finance that
Note12
N/A
N/A
N/A
Branch Manager
Taiwan
Cheng
Yuan
Chang
2012.05.01
51,558
0.00
0
0
0
0
Chung Yuan Christian University
Department of Applied Mathematics
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Tzu Hsin
Yang
2011.11.25
9,036
0.00
0
0
0
0
Tourism Management Department of
Providence University career
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Yun Liang
Lu
2015.02.01
232,995
0.01
0
0
0
0
Taipei Institute of Textile Engineering
Section
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Yu Te Su
2014.05.16
35,419
0.00
0
0
0
Department of Finance Jinwen
0 University of Science and Technology
Finance
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Wen Po
Wang
2015.02.01
223,350
0.01
0
0
0
0
Fengshan commercial providers employment
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Pei Chun
Tsai
2014.03.03
0
0
0
0
0
0
Taichung University of Science and
Applications Department of Business.
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Yung Feng
Chen
2012.07.01
98,671
0.00
0
0
0
0
Hiking Junior College Electronics
Division
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Ya Hua
Wu
2014.05.16
58,320
0.00
0
0
0
0
Lan Yang Institute of Technology
Department of Statistics, Accounting
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Feng Chi
Lin
2012.05.12
68,384
0.00
0
0
0
0
Department of Business and Culture
University
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Shih Hsun
Chen
2012.08.27
85,108
0.00
0
0
0
0
University Department of International
Trade Practice
N/A
N/A
N/A
N/A
25
III
Unit: share; %
February 28, 2015
Title
Nationality
and
Registry
Name
Date of
Appointment/
Employment
and Minor Children
Shares held
Shareholding
Ratio
Shares
of others
Experience
Shareholding
Shareholding
Shares
Ratio
Ratio
Shares
at other
Branch Manager
Taiwan
Yu Te Lin
2011.07.01
16,638
0.00
0
0
0
0
Chengchi University Department of
Banking
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Chung
Hsuan Li
2012.02.20
23,187
0.00
0
0
0
0
Practice of Finance Department of
Finance University.
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Chun
Liang Lin
2010.02.01
76,121
0.00
0
0
0
0 Accounting Tunghai University
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Chiu
Huang
Chang
2010.06.24
24,511
0.00
0
0
0
0
Chaoyang University of Technology
LQVXUHG¿QDQFLDOPDQDJHPHQW
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Wen
Hsiung
Huang
2011.07.01
13,153
0.00
0
0
0
0
Chung Yuan Christian University
Department of International Trade
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Mei Ling
Lin
2009.09.01
39,968
0.00
0
0
0
0
Kaohsiung HEC comprehensive
business families.
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Chi Feng
Hung
2014.09.26
2,730
0.00
0
0
0
0 Sun Yat-sen Qi Yansuo.
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Yung Hui
Yang
2013.07.19
34,744
0.00
0
0
0
0
Chung Yuan Christian University Qi
Yansuo.
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Tsai Ti
Hung
2009.09.01
63,607
0.00
0
0
0
0
Three letters High Chamber of
Commerce and Manpower Branch.
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Po Cheng
Hsu
2014.10.01
0
0
0
0
0
0 Fu Jen Catholic University Finance Dep.
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Chien
Hsing
Chen
2013.06.21
0
0
0
0
0
0
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Cheng
Jung Tsai
2012.09.03
14,894
0.00
0
0
0
0 Saint Leo University EMBA
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Ching Chi
Huang
2013.11.04
14,469
0.00
0
0
0
0
Tamkang University Department of
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Yao Hsien
Yang
2014.05.01
46,185
0.00
0
0
0
0
China Industrial and Commercial Junior
College Business Division.
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Shao Wen
Hsieh
2014.05.01
25,889
0.00
0
0
0
0
Ming Chuan University accounting
department
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Li Yun
Huang
2012.08.27
74,821
0.00
0
0
0
0
National Chengchi University
international trade
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Chung
Chien
Chiang
2014.07.28
470
0.00
0
0
0
0
Hsing Wu College Bancassurance
Division
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Hsueh
Ling Wu
2011.08.01
64,403
0.00
0
0
0
0 Soochow University EMBA.
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Pin Shih
Kao
2011.02.24
18,721
0.00
0
0
0
0
Fu Jen Catholic University Department
of International Trade
N/A
N/A
N/A
N/A
Branch Manager
Taiwan
Po Fu
Chen
2014.08.01
233,280
0.01
0
0
0
0
Department of Business and Political
University
N/A
N/A
N/A
N/A
26
Deming Technology Institute of
International Trade Division
Responsibilities for Other Companies
Name
Company
Title
Ta Chong Securities Co., Ltd.
Director
7D&KRQJ,QW
O)LQDQFH,QYHVWPHQW%9,/WG
Director
(Note 2) Ya-Ping Zhuang
7D&KRQJ,QW
Director
(Note 3) Charles Hsieh
7D&KRQJ,QW
Director
Galaxy Shipping Corporation.
Director
Uniwise Information Corporation.
Director
(Note 1) Justin Tsai
(Note 4) Leon Kuo
Ta Chong Life Insurance Agency Ltd.
Chairman
Ta Chong General Insurance Agency Ltd.
Chairman
Supervisor
Supervisor
Supervisor
(Note 5) Victor Chen
(Note 6) Eileen Wei
(Note 7) Edward Tyane
Director
Director
Director
Director
(Note 8) Tracy Chu
1RWH+XL=KHQ;LDR
Taiwan Weather Co., Ltd.
(Note 10) Shun Ji Chang
Fu Shin Int'l Co., Ltd.
(Note 11) De Yu Yuan
La Wang Enterprise Co., Ltd.
Chairman
Director
Supervisor
Ri Chang Construction Co., Ltd
Director
Hua Ting Int'l Co., Ltd.
Director
(Note 12) Su Jiyuan Jhan
27
III
3. Recent annual remuneration paid to directors, supervisors, president and senior executive
vice president and distribution of employee bonuses
(1) Remuneration paid to Directors
December 31, 2014
Remuneration paid to Directors
Retirement pension
(B)
Remuneration (A)
Title
Remuneration allocation of
surplus (C)
Operational implementation
costs (D)
The proportion of
net income of
A, B, C and D
Name
The Bank
All the
companies in
WKH¿QDQFLDO
report
The
Bank
All the
companies in
WKH¿QDQFLDO
report
All the companies
All the companies
LQWKH¿QDQFLDO
The Bank LQWKH¿QDQFLDO
report
report
The Bank
The Bank
All the
companies
in the
¿QDQFLDO
report
Fonbao Financial
Management Ltd.
5HS&KLHQ3LQJ
Chen (Note1)
10,200,000
10,200,000
0
0
211,000
211,000
0.74%
0.74%
Pei Kang Limited.
Vice Chairman 5HS*UHJRU\
Zeluck
6,800,000
6,800,000
0
0
5,400,000
5,400,000
105,000
105,000
0.47%
0.47%
Chairman
Director
Ching Yuan
Investment Co., Ltd.
5HS6KX+XL+XDQJ
Chen
1,360,000
1,360,000
0
0
2,400,000
2,400,000
0.15%
0.15%
Director
Pei Kang Limited.
5HS$OH[<LQJ
1,700,000
1,700,000
0
0
2,400,000
2,400,000
168,000
168,000
0.16%
0.16%
Director
Pei Kang Limited.
5HS6KHDX-LQ/HH
1,700,000
1,700,000
0
0
2,400,000
2,400,000
0.16%
0.16%
Director
Pei Kang Limited.
5HS6XQLO.DXO
1,360,000
1,360,000
0
0
2,400,000
2,400,000
0.15%
0.15%
Director
Kwang Yang Motor
Co. Ltd.
5HS3HQJ5RQJ
Lin
1,360,000
1,360,000
0
0
2,400,000
2,400,000
0.15%
0.15%
Director
Hong Guang
5HS<X)HQJ.R
1,360,000
1,360,000
0
0
2,400,000
2,400,000
0.15%
0.15%
Director
Pei Kang Ltd.
5HS/LQ6HQ&KHQ
1,700,000
1,700,000
0
0
2,400,000
2,400,000
226,000
226,000
0.16%
0.16%
Independent
Director
Joseph Fan
3,200,000
3,200,000
0
0
0
0
120,000
120,000
0.13%
0.13%
Independent
Director
Joseph Tung
3,400,000
3,400,000
0
0
0
0
112,000
112,000
0.13%
0.13%
Independent
Director
Ming-Hsin Kung
3,400,000
3,400,000
0
0
0
0
138,000
138,000
0.13%
0.13%
Independent
Director
Cheng Young Kao
3,400,000
3,400,000
0
0
0
0
271,000
271,000
0.14%
0.14%
1RWH7KH&KDLUPDQKDVEHHQDVVLJQHGZLWKDGULYHUZLWKVDODU\DQGRYHUWLPHSD\WKHVDODU\LVDQGRYHUWLPHSD\LV
28
December 31, 2014
Emoluments serves as employee
The proportion of
net income of A,
B, C, D, E, F and
Salaries, bonuses
Retirement
Employee shares
employee dividend distribution (G)
Received
G
and special fees (E) pension (F)
options (H)
from reinvestment
other than
All
the
companies
in
All the
All the
All the
All the
All the
The Bank
subsidiaries
WKH¿QDQFLDOUHSRUW
companies
companies
companies
companies
companies
The
The
The
The
in the
in the
The Bank in the
in the
in the
Bank
Bank
Bank
Bank
¿QDQFLDO
¿QDQFLDO Cash
¿QDQFLDO
¿QDQFLDO
¿QDQFLDO
Shares Cash
Shares
report
report
report
report
report
Dividend dividend Dividend dividend
Restrict
employee
shares
Title
Name
Chairman
Fonbao Financial
Management Ltd.
5HS&KLHQ3LQJ
Chen (Note1)
Vice
Chairman
Pei Kang Limited.
5HS*UHJRU\
Zeluck
Director
0
0
0
0
0
0 16,758,000
0
0
0
0
0
0
0
0
Ching Yuan
5HS6KX+XL+XDQJ
Chen
0
0
0
0
0
0
0
Director
Pei Kang Limited.
5HS$OH[<LQJ
0
0
0
0
0
0
Director
Pei Kang Limited.
5HS6KHDX-LQ/HH
0
0
0
0
0
Director
Pei Kang Limited.
5HS6XQLO.DXO
0
0
0
0
0
Director
Kwang Yang Motor
Co. Ltd.
5HS3HQJ5RQJ
Lin
0
0
0
0
0
0
0
0
0
0
0
0 0.15%
0.15%
Director
Hong Guang
5HS<X)HQJ.R
0
0
0
0
0
0
0
0
0
0
0
0 0.15%
0.15%
Director
Pei Kang Ltd.
5HS/LQ6HQ&KHQ
0
0
0
0
0
0
0
0
0
0
0
0 0.16%
0.16%
Independent
Director
Joseph Fan
0
0
0
0
0
0
0
0
0
0
0
0 0.13%
0.13%
Independent
Director
Joseph Tung
0
0
0
0
0
0
0
0
0
0
0
0 0.13%
0.13%
Independent
Director
Ming-Hsin Kung
0
0
0
0
0
0
0
0
0
0
0
0 0.13%
0.13%
Independent
Director
Cheng Young Kao
0
0
0
0
0
0
0
0
0
0
0
0 0.14%
0.14%
16,758,000
0
0 0.86%
0.86%
0
0
0
0 0.47%
0.47%
0
0
0
0
0 0.15%
0.15%
0
0
0
0
0
0 0.16%
0.16%
0
0
0
0
0
0
0 0.16%
0.16%
0
0
0
0
0
0
0 0.15%
0.15%
N/A
29
III
(2) Remuneration paid to Supervisors
December 31, 2014
Remuneration paid to Supervisors
Remuneration (A)
Title
Name
Supervisor
Qin Yu Investment Co.,
/WG5HS7KRPDV/HH
Retirement pension (B)
The Bank
All the
companies in
WKH¿QDQFLDO
report
2,550,000
2,550,000
The Bank
All the
companies in
WKH¿QDQFLDO
report
0
0
Remuneration allocation of
surplus (C)
The Bank
All the
companies in
WKH¿QDQFLDO
report
2,400,000
2,400,000
Operational implementation
costs (D)
The Bank
The proportion of net
income of A, B, C and D
All the
companies in
WKH¿QDQFLDO
report
The Bank
All the
companies in
WKH¿QDQFLDO
report
233,000
0.20%
0.20%
233,000
Received
from reinvestment
other than
subsidiaries
N/A
Cheng Young Kao
Supervisor %R:HL/WG5HS
Sue Ho
2,550,000
2,550,000
0
0
2,400,000
2,400,000
0.20%
0.20%
(3) Remuneration paid to the president and senior executive vice president and numerical range
December 31, 2014
Remuneration (A)
Title
Retirement
pension (B)
Remuneration
The proportion of
allocation of surplus Operational implementation costs (D) net income of A,
(C)
B, C and D
Received
from reinvestment
All the companies
Name
other than
The Bank
LQWKH¿QDQFLDO
All the
All the
All the
All the
All the
All the
subsidiaries
report
companies
companies
companies
companies
companies
companies
(Note 5)
The
The
The
in the
in the
The Bank
in the
in the
The Bank
in the
in the
The Bank
Bank
Bank
Bank
¿QDQFLDO
¿QDQFLDO
¿QDQFLDO
¿QDQFLDO Cash Shares Cash
¿QDQFLDO
¿QDQFLDO
Shares
report
report
report
report
report
report
Dividend dividend Dividend dividend
President
Justin
Tsai
(Note 1)
Chief
Auditor
MingHsiu
Tsai
(Note 2)
Senior
Executive
Vice
President
Leon
Kuo
Senior
Executive Loo-Fei
Huang Vice
President
0
0
58,231,017 58,231,017 3,050,826
0
3,050,826
0
4.57%
Senior
Charles
Executive
Hsieh
Vice
(Note3)
President
Senior
Niel
Executive
Chang
Vice
(Note 4)
President
Senior
Executive Ya-Ping
Zhuang
Vice
President
1RWH$VVLJQHGZLWKDGULYHUZLWKVDODU\DQGRYHUWLPHSD\WKHVDODU\LVDQGRYHUWLPHSD\LV
1RWH&RPSHQVDWLRQUHFHLYHGIURPVXEVLGLDULHVLVDWWHQGDQFHIHH
30
Restrict
employee
shares
Employee shares
options
0
0
0
0
18,000
Remuneration Range
December 31, 2014
Name of the President or Senior Executive Vice President
President and Senior Executive Vice President Remuneration Range
Under $2,000,000
The Bank
$OOWKHFRPSDQLHVLQWKH¿QDQFLDO
0
0
LQFOXGLQJaH[FOXGLQJ
0
0
LQFOXGLQJaH[FOXGLQJ
Ming-Hsiu Tsai, Loofei Huang
Ming-Hsiu Tsai, Loofei Huang
LQFOXGLQJaH[FOXGLQJ
Ya Ping Zhuang, Leon Kuo,
Charles Hsieh
Ya Ping Zhuang, Leon Kuo,
Charles Hsieh
LQFOXGLQJaH[FOXGLQJ
Niel Chang
Niel Chang
LQFOXGLQJaH[FOXGLQJ
Justin Tsai
Justin Tsai
LQFOXGLQJaH[FOXGLQJ
0
0
100,000,0000 and more
0
0
Total
7
7
(4) Distribution of Employee Bonus
Title
Name
President
Justin Tsai
Ya-Ping Zhuang
Chief Auditor
Ming-Hsiu Tsai
Niel Chang
Charles Hsieh
Leon Kuo
Loo-Fei Huang
Kevin Chen
John Chou
Indra Huang
Victor Chen
Kris Hung
Ena Sue
Eileen Wei
Johnson Chang
Vincent Lai
Edward Tyane
Peter Chiou
Tracy Chu
Shao-Hung Wu
Pei-Chen Tsai
Jia-Yu Li
Han-Qing Chang
Erh-Ke Tung
February 28, 2015
Stock bonus
Cash bonus
Total
The proportion to net
income
N/A
0.23%
（Continued）
31
III
Title
Name
Branch Manager
Yu Mei Yang
Branch Manager
Shu Yueh Lin
Branch Manager
Shu Mei Lin
Branch Manager
Yi Shan Li
Branch Manager
Hui Yu Lin
Branch Manager
Chi Nan Yang
Branch Manager
Meng Chao Tsai
Branch Manager
Hsiao Ying Kuo
Branch Manager
Miao Ling Wu
Branch Manager
Pao Lin Wang
Branch Manager
Chih Hui Chang
Branch Manager
Chien An Chen
Branch Manager
Shuen Chi Chang
Branch Manager
Kuan Lan Chin
Branch Manager
Hui li Pai
Branch Manager
Hsueh Ping Yeh
Branch Manager
Su Ning Chang
Branch Manager
Shu Hui Chen
Branch Manager
Li Hua Feng
Branch Manager
Yung Lung Chan
Branch Manager
Ming Lu Chang
Branch Manager
Ya Chang Huang
Branch Manager
Yi Chun Wan
Branch Manager
Chih Kang Feng
Branch Manager
Chia Lin Liu
Branch Manager
Chen Chieh Wu
Branch Manager
Pei Chen Chung
Branch Manager
Fu Hsiang Chen
Branch Manager
Te Yu Yuang
Branch Manager
Pei Yu Wu
Branch Manager
Chih Hung Chou
Branch Manager
Wen Hsiang Cheng
Branch Manager
Hung Ling Wang
Branch Manager
Ya Hui Chen
Branch Manager
Hung Chien Hsu
Branch Manager
Chih Hsiang Chang
Branch Manager
Ya Chin Lin
Branch Manager
Shu Chuang Chan
Branch Manager
Cheng Yuan Chang
Stock bonus
Cash bonus
Total
income
N/A
0.23%
（Continued）
32
Title
Name
Branch Manager
Tzu Hsin Yang
Branch Manager
Yun Liang Lu
Branch Manager
Yu Te Su
Branch Manager
Wen Po Wang
Branch Manager
Yung Feng Chen
Branch Manager
Ya Hua Wu
Branch Manager
Feng Chi Lin
Branch Manager
Shih Hsun Chen
Branch Manager
Yu Te Lin
Branch Manager
Chung Hsuan Li
Branch Manager
Chun Liang Lin
Branch Manager
Chiu Huang Chang
Branch Manager
Wen Hsiung Huang
Branch Manager
Mei Ling Lin
Branch Manager
Chi Feng Hung
Branch Manager
Yung Hui Yang
Branch Manager
Tsai Ti Hung
Branch Manager
Cheng Jung Tsai
Branch Manager
Ching Chi Huang
Branch Manager
Yao Hsien Yang
Branch Manager
Shao Wen Hsieh
Branch Manager
Li Yun Huang
Branch Manager
Chung Chien Chiang
Branch Manager
Hsueh Ling Wu
Branch Manager
Pin Shih Kao
Branch Manager
Po Fu Chen
Senior Vice President
Wen Shin Huang
Senior Vice President
Chih Han Tsai
Stock bonus
Cash bonus
Total
income
N/A
0.23%
33
III
(5) Bank and consolidated reports for all the directors, supervisors, president and senior executive vice
president of the Company in the last two years, and the proportion of the total remuneration, and the
remuneration policy, standards and combinations, procedures and relationship between operating
performance and future risks
1. The percentage of 2013 total annual remuneration paid to directors, supervisors, president and senior
executive vice president out of net income is 8.18%.
The percentage of 2014 total annual remuneration paid to directors, supervisors, president and senior
H[HFXWLYHYLFHSUHVLGHQWRXWRIQHWLQFRPHLV
2. Remuneration Policy
(1) The main consideration of manager remuneration is experience and responsibilities of each manager, and
based on the overall state of the annual profit and goal achievement status, and individual performance
assessment.
(2) The standard of remuneration of directors and supervisors, may refer to external market standards and
financial industry practices, as well as the scope of work of directors and supervisors, also taking into
account the risk, operating conditions and whether the operating performance has significant changes and
other factors, and adjustable by the Board of Directors in consideration of the aforementioned factors. Any
future amendments to the remuneration system will take into consideration of the prospective risks.
34
4. Operation
(1) Operation of Board of Directors
Information on the Operations of the Board of Directors
The Board of Directors held 14 meetings during the year. Attendance record of the directors and supervisor for
WKHERDUGPHHWLQJVDUHVHWIRUWKEHORZ
Title
Name
Attendance in
person
Attendance by
proxy
Rate of attendance in
person (%)
Chairman
Fonbao Financial Management Ltd.
5HS&KLHQ3LQJ&KHQ
14
0
100%
Pei Kang Limited.
5HS*UHJRU\=HOXFN
12
0
86%
Director
5HS6KX+XL+XDQJ&KHQ
12
0
86%
Director
Pei Kang Limited.
5HS$OH[<LQJ
13
1
Director
3HL.DQJ/LPLWHG5HS6XQLO.DXO
10
0
71%
Director
Pei Kang Limited.
5HS6KHDX-LQ/HH
12
1
86%
Director
3HL.DQJ/WG5HS/LQ6HQ&KHQ
14
0
100%
Director
5HS<X)HQJ.R
12
1
86%
Director
Kwang Yang Motor Co. Ltd.
5HS3HQJ5RQJ/LQ
11
2
Ming-Hsin Kung
13
1
Cheng Young Kao
14
0
100%
Joseph Tung
10
4
71%
Joseph Fan
12
2
86%
Supervisor
Bo Wei Ltd.
5HS6XH+R
11
0
85%
$WWHQGDQFHLQSHUVRQ
Supervisor
5HS7KRPDV/HH
13
0
100%
$WWHQGDQFHLQSHUVRQ
Vice Chairman
Notes
2WKHUPDWWHUVWKDWVKDOOEHUHFRUGHG
7KHLWHPVVHWIRUWKLQ$UWLFOHRIWKH6HFXULWLHVDQG([FKDQJH$FWDVZHOODVGLVVHQWLQJRUTXDOLILHGRSLQLRQ
RILQGHSHQGHQWGLUHFWRUVZKLFKDUHQRWHGLQWKHPLQXWHVRIWKHGLUHFWRUVPHHWLQJZLWKWKHUHTXLUHGLQIRUPDWLRQ
including date, term, subject matter of the Board of Directors' meeting, all the opinions of the independent
GLUHFWRUVDQGWKH&RPSDQ\
VUHVSRQVHWRZDUGVH[SUHVVHGRSLQLRQV1RQH
2. Regarding directors' recusal due to conflict of interest, information including the name of the director with
potential conflict of interest ("interested director"), subject matter, reason for conflict of interest recusal and
deliberation participation shall be recorded.
5HVROXWLRQVUHODWHGWRLQWHUHVWHGGLUHFWRUVDVVHWIRUWKLQ$UWLFOHRI%DQN$FWDUHVXPPDUL]HGEHORZ'XHWR
the conflict of interest occurred by reason of the directors' position as the relevant company's representative,
director, supervisor, or related party of the director, the director has recused from the discussion and voting of
the following resolutions.
35
III
March 26, 2015
Date of
Meeting
Term
Interested
Directors
Subject Matter
5HDVRQIRU&RQÀLFWRI,QWHUHVW
Recusal
Participation in
Deliberation
2014.1.23
8th meeting
RIWKWHUP
Chien-Ping Chen
Shu-Hui Huang Chen
Amend the “Guideline of hiring
Consultant.”
The motion involves 3rd degree
of kinship of the interested
director.
The interested
person didn't join the
discussion and voting.
2014.1.23
8th meeting
RIWKWHUP
Yu-Feng Ko
Peng Rong Lin
Change credit conditions of the client
Kwang Yang Motor Co. Ltd.
The interested directors are
concurrently the director and
manager of such company.
The interested
2014.1.23
8th meeting
RIWKWHUP
Chien-Ping Chen
Shu-Hui Huang Chen
Review the advisory report of 2013.
director.
The interested
2014.2.20
WKPHHWLQJ
RIWKWHUP
Chien-Ping Chen
Shu-Hui Huang Chen
Gregory Zeluck
Alex Ying
Sunil Kaul
Sheau-Jin Lee
Lin Sen Chen
Yu-Feng Ko
Peng Rong Lin
Sue Ho
Thomas Lee
Amend the remuneration of chairman,
vice chairman, directors and supervisors.
7KHPRWLRQLQYROYHVWKHEHQH¿WV
of director and supervisor
themselves.
The interested
2014.3.27
10th meeting
RIWKWHUP
Chien-Ping Chen
Shu-Hui Huang Chen
Invest on Ta Chong International Leasing
Co., Ltd. at the amount of NTD 1.15
billion.
director.
The interested
2014.3.27
10th meeting
RIWKWHUP
Joseph Fan
Joseph Tung
Appoint the remuneration committee
of director and supervisor
themselves.
The interested
2014.3.27
10th meeting
RIWKWHUP
Chien-Ping Chen
Shu-Hui Huang Chen
Establish the minor credit loan company in
China through the Company's subsidiary
Ta Chong International Leasing Co., Ltd.
director.
The interested
2014.3.27
10th meeting
RIWKWHUP
Gregory Zeluck
Alex Ying
Sunil Kaul
Sheau-Jin Lee
Lin Sen Chen
Approve the private placement of
overseas convertible debentures
The motion involves major
shareholders.
The interested
2014.3.27
10th meeting
RIWKWHUP
Gregory Zeluck
Alex Ying
Sunil Kaul
Sheau-Jin Lee
Lin Sen Chen
Amend the AOI
shareholders.
The interested
2014.3.27
10th meeting
RIWKWHUP
Joseph Tung
5HYLHZWKHORDQRI8QLYHUVDO6FLHQWL¿F
Industrial Co.(Huan Long)
The interested director is
concurrently the supervisor of
such company.
The interested
2014.3.27
10th meeting
RIWKWHUP
Joseph Tung
Industrial Co. (Huan Hung)
The interested director is
concurrently the supervisor of
such company.
The interested
2014.4.24
11th meeting
RIWKWHUP
Joseph Fan
Amend the salary of independent director
of the director.
The interested
11th meeting
RIWKWHUP
Chien-Ping Chen
Shu-Hui Huang Chen
Gregory Zeluck
Alex Ying
Sunil Kaul
Sheau-Jin Lee
Lin Sen Chen
Yu-Feng Ko
Peng Rong Lin
Sue Ho
Thomas Lee
Approve the remuneration of directors
(excludes independent director),
supervisors and manager of 2013
2014.4.24
36
of the director and supervisor
themselves.
The interested
March 26, 2015
5HDVRQIRU&RQÀLFWRI,QWHUHVW
Recusal
Date of
Meeting
Term
2014.4.24
11th meeting
RIWKWHUP
Chien-Ping Chen
Approve the employee stock option of
2013
The motion involves the director
himself.
The interested
2014.5.15
12th meeting
RIWKWHUP
Gregory Zeluck (absent)
Alex Ying
Sunil Kaul
Sheau-Jin Lee
Lin Sen Chen
Preferred shareholder states its opinion
of the share dividends, stating that Class
C preferred shares are redeemed 10
years after its issuance in 2017, upon the
approval of the shareholders in 2018, the
shares are entitled to 2017 dividends in
accordance with the days issued..
shareholders.
The interested
13th meeting
RIWKWHUP
Yu-Feng Ko
Peng Rong Lin
Review the loan of Kwang Yang Motor
Co. Ltd.
The motion involves interested
directors who are concurrently
the director and manager of such
company.
The interested
13th meeting
RIWKWHUP
Chien-Ping Chen
Shu-Hui Huang Chen
Review the loan of Ta Chung Int. Leasing
Co. Ltd.
The motion involves 3rd degree of
kinship of the interested director.
The interested
2014.7.24
14th meeting
RIWKWHUP
Yu-Feng Ko(absent)
Peng Rong Lin
Review the loan of Hong Kwang Co. Ltd.
directors who are concurrently
the director of such company.
The interested
2014.7.24
14th meeting
RIWKWHUP
Chien-Ping Chen
Shu-Hui Huang Chen
Review the loan of Ta Chung securities.
The interested
16th meeting
RIWKWHUP
Yu-Feng Ko
Peng Rong Lin
Amendment credit conditions of the client
directors are concurrently the
director and manager of such
company.
The interested
2014.4.3
2nd meeting
RIWKWHUP
(Interim)
Gregory Zeluck (absent)
Sheau-Jin Lee (absent)
Sunil Kaul (absent)
Alex Ying
Lin Sen Chen
Approve the “private placement of
overseas convertible bonds approach"
and assessment submission.
shareholders.
The interested
3rd meeting
RIWKWHUP
(Interim)
Alex Ying (absent)
Sunil Kaul (absent)
Gregory Zeluck
Sheau-Jin Lee
Lin Sen Chen
Approve the private placement of
overseas debentures.
shareholders.
The interested
2015.1.22
20th meeting
RIWKWHUP
Chien-Ping Chen
Shu-Hui Huang Chen
Review the advisory report of 2014.
The interested
2015.1.22
20th meeting
RIWKWHUP
Chien-Ping Chen
Approve the employee stock option of
2014
The motion has the interest with
director himself.
The interested
2015.3.26
21st meeting
RIWKWHUP
Joseph Tung
Industrial Co. (Huan Long)
The motion involves the interested
director who is concurrently the
supervisor of such company.
The interested
21st meeting
RIWKWHUP
Chien-Ping Chen
Shu-Hui Huang Chen
Gregory Zeluck
Alex Ying
Sunil Kaul
Sheau-Jin Lee
Lin Sen Chen
Yu-Feng Ko
Peng Rong Lin
Sue Ho
Thomas Lee
Approve the remuneration of directors
(excludes independent director),
supervisors and manager of 2014
The motion involves the interest
with director and supervisor
themselves.
The interested
2015.3.26
Interested
Directors
Subject Matter
Participation in
Deliberation
37
III
3. The objectives of strengthening the functionality of the Board of Directors for the present year and the most
recent year (for instance, the establishment of the Audit Committee, increasing information transparency etc.)
DQGDVVHVVPHQWRQWKHLPSOHPHQWDWLRQ
L ,Q RUGHU WR HQKDQFH WKH FRUSRUDWH JRYHUQDQFH DQG GHFLVLRQ TXDOLW\ WKH %DQN KDV VHW XS WKH IXQFWLRQDO
committees and project teams, includes Internal Audit Committee, Executive Committee, Strategic
Development Team, Remuneration Committee and Credit Review Team. All the above committees and
WHDPVUHYLHZPDQDJHPHQWRIGHSDUWPHQWVWRUHGXFHEXVLQHVVULVNDQG,PSURYHWKHPDQDJHPHQWTXDOLW\
ii. The Board conducts its operation in accordance with the “Rules Governing Procedures for Meeting of
Board of Directors”.
iii. In order to disclose the information, all the financial and business information and corporate governance
has disclosed in annual report, official website, and MOPS.
iv. The Bank has appointed a spokesman in order to deliver updated announcements to the public.
(2) Operation of Audit Committee or the board meeting attendance by the supervisors
1. Operation of Audit Committee
i. The Bank didn't set up an Audit Committee, instead, an internal audit committee under the Board of
Directors is set up, which consists of four independent directors, who reviews and comments on the issues
proposed by the Board.
ii. It is expected that the Audit Committee will be set up at the termination of the current term of Board of
Directors in 2016.
2. Operation of the board meeting attendance by the supervisors
5HFHQWO\WKH%RDUGRI'LUHFWRUVKHOGPHHWLQJWLPHV$DWWHQGDQFHLVDVIROORZV
Title
38
Name
Actual Attendance(B)
Actual Attendance Ratio (%)(B/A))
Note
Supervisor
Bo Wei Ltd.
5HS6XH+R
11
85%
$FWXDO$WWHQGDQFHWLPHV
Supervisor
5HS7KRPDV/HH
13
100%
$FWXDO$WWHQGDQFHWLPHV
2WKHULWHPVWKDWVKDOOEHUHFRUGHG
7KHFRPSRVLWLRQDQGGXWLHVRIVXSHUYLVRUV
$&RPPXQLFDWLRQ ZLWK WKH %DQN
V HPSOR\HHV DQG VKDUHKROGHUV 6XSHUYLVRUV VHYHUHG DV FRPPXQLFDWLRQ
windows between employees and shareholders through the board office; if necessary, call or e-mail
contact employees directly. There is good communication with the Bank's employees.
%&RPPXQLFDWLRQZLWKLQWHUQDOFKLHIDXGLWRIILFHUDQGDFFRXQWDQWV
Items
Method and result
Supervisor and chief
auditor
(1) General and special internal audit case.
(2) Regularly report to the internal audit committee and the Board.
(3) Annual report to the internal audit committee and the Board.
5HSRUWWRLQWHUQDODXGLWFRPPLWWHHUHTXHVWHGE\%RDUG
(5) Hold the internal auditors reviewing forum
(1) By email
(2) Discuss in the Board meeting and internal audit
committee.
(3) To understand the audit purpose and need by forum
Supervisor and CPA
5HYLHZWKH$QQXDO¿QDQFLDOUHSRUW
5HYLHZWKH4¿QDQFLDOUHSRUW
5HYLHZWKH4¿QDQFLDOUHSRUWDQGH[HFXWLRQRI,)56V
5HYLHZWKH4¿QDQFLDOUHSRUW
Discuss in the internal audit committee.
(2) In the resolutions of the Board Meeting, if any member expresses objections or has reservations, then
the Board Meeting shall record the date, term, subject matter of motions, opinions of its members and the
PHDVXUHVWDNHQ1$
(3) Disclose matters required by the Banking Practice Governance Rule
3OHDVHVHHWKHRIILFLDOZHEVLWHKWWSZZZWFEDQNFRPWZRQ*HQHUDO3XEOLF&RUSRUDWH*RYHUQDQFHVHFWLRQ
39
III
(4) The discrepancy between the Banks' and its major subsidiaries' implementation of corporate governance
and the Corporate Governance Best Practice Principles for Banks and the reason for such discrepancy
1.The Bank
Implementation Status
Discrepancy with the
Principles and Reasons
Item
Yes
No
Explanation
$2ZQHUVKLS6WUXFWXUHDQG6KDUHKROGHUV
(TXLW\
None
1. Handling of shareholders' suggestions and disputes in
accordance with internal rules?
V
1. Set spokesman to deal with the reference
matter; and have legal staff who is
responsible for litigation matters.
2. Controlling major shareholders and the ultimate controller
of the Bank?
V
2. The Company has a full understanding of
the relevant information of shareholder.
5LVNDVVHVVPHQWDQG¿UHZDOOVHVWDEOLVKHGDJDLQVWWKH
RSHUDWLRQVZLWKWKHDI¿OLDWHV"
V
5HODWLRQVKLSDPRQJDI¿OLDWHVKDYHFOHDU
division between each other and the
transaction are handled in accordance
with laws and regulations and make the
necessary monitoring.
B. Organization and Responsibilities of the Board of Directors
None
1. Besides Remuneration Committee and the Audit
Committee, is there any other functional committee?
V
1. The Company currently has establish
Operation Committee, Risk Management
Committee, Internal Audit Committee, Credit
Review Team, Strategic Development Team
and other functional committees or groups.
2. Regularly review the independence of CPA?
V
2. Discuss the independence of CPA by the
Internal Audit Committee, and pass to the
Board for consideration.
C. Communications with Interested Parties
V
2I¿FLDOZHEVLWHZZZWFEDQNFRPWZ
Set up the “Interested Parties Section” under
the “About Ta Chung Section” to provide
access. Interested Parties may reach the contact
window or through the message board.
D. Disclosure of Information
1. Setting up a corporate website to disclose information
UHJDUGLQJWKHEDQN
V¿QDQFLDOVDQGJRYHUQDQFH"
V
2I¿FLDOZHEVLWHZZZWFEDQNFRPWZDQG
GLVFORVHWKHUHFHQW¿QDQFLDOUHSRUWDQG
governance information.
V
2. Set up spoken man and appoint the
responsible person and disclose material
information through MOPS.
2. Other information disclosure channels (ex. English
website, responsible person for disclosure matters)
40
None
None
Item
Yes
E. Other important information to help to understand the
operation situation of corporate governance (including but
not limited to employee rights, employee care, investor
relations, stakeholder interests, training of directors and
supervisors, risk management policies and risk execution
situation, the implementation of the policy of the customer,
the situation of banks to buy liability insurance for the
directors and supervisors, donation to the parties, interested
parties and public interest groups, etc.)?
No
Explanation
(PSOR\HHV
ULJKWV7KH%DQNKDVQRJHQGHU
and age discrimination in hiring staff ages,
DQGDOVRSURYLGHVHTXDOHPSOR\PHQWWR
disabilities.
V
None
(PSOR\HH&DUH7KH%DQNSURYLGHV
welfare policy, and a comfortable and safe
working environment and the necessity of
emergency relief.
,QYHVWRU5HODWLRQV7KH%DQNWKURXJK
a spokesman system to have effective
communication and contact with investors,
on the other hand also provide on the
Bank's website and MOPS to get the latest
FRPSDQ\RSHUDWLQJSUR¿OHV
,QWHUHVWHGSDUW\DQGFOLHQWSROLFLHVWKH%DQN
gather and use customer information fully
comply with the law, to protect customer
privacy based on "public bank customer
data management guidelines"; In addition,
the Bank also set up employee-mail, and
form industrial unions, and provided a
perfect communication for the suggestions
proposed by the staff.
5. Published in MOPS about directors and
supervisors training situation in accordance
with regulations.
6. The Bank has disclosed on the website
about risk management policy and risk
measurement, detail of case, please refer to
WKHKWWSZZZWFEDQNFRPWZ
7. The Company has insured professional
liability insurance of directors and
supervisors.
8. The Company donated NT$ 5 million to
"Kaohsiung gas explosion".
F. Do the Bank provides self-assessed corporate governance
report or commissioned by other professional institutions?
(If yes, please stating its views of Board, self-assessment or
outsourcing evaluation results, the main issues and missing
or recommendations).
V
To be implemented in accordance with law
To be implemented
41
III
2. Ta Chong Securities
Item
Yes
A. Establish rules based on Corporate Governance
Best Practice Principles for TWSE/GTSM Listed
Companies?
No
Explanation
V
The company will establish the “Corporate
governance system” in compliance with
laws and regulations
To be implemented
V
1. A spokesman system has been
established in accordance with the
rules to deal with suggestions from and
disputes with shareholders.
1. This company will establish internal
operation procedure to hand
relevant matters in accordance with
laws and regulations.
B. Shareholding Structure and Shareholders' Rights
1. Has the company established internal rules for
handling of shareholders' suggestions and disputes
and implement such rules?
2. Does the company have access to the list of the
company's major shareholders controlling the
company and their ultimate controlling person(s)?
V
2. The company has obtained shareholders
listing for the stock agent and has
information on the major shareholders
and their ultimate controlling person(s).
2. None
3. Has the company established risk assessment
system and firewalls on operations with its
DI¿OLDWHV"
V
3. The company has established the
"Operating Procedures for Conducting
Business with Group Companies,
Specific Companies and their Affiliates,
and Related Parties" and other related
rules and regulations to control the
transactions among related enterprises.
3. None
4. Has the company established internal standards to
prohibit insider trade using non-public information?
V
4. The company handles the mater in
accordance with the regulations set forth
by the competent authorities.
4. None
C. Organization and Responsibilities of the Board of
Directors
1. Has the Board of Directors implemented measures
to diversify its composition?
V
1. Composition of the company's Board of
directors is made up of elite professionals
IURP¿QDQFLDODQGFRPPHUFLDOLQGXVWULHV
In addition to supervising the securities
and financial operations to make them
PRUHGLYHUVL¿HGDQGWKHLULPSOHPHQWDWLRQ
more accountable; however the company
has not yet set up any specific rule
UHTXLULQJ GLYHUVLILFDWLRQ RI LWV ERDUG
members.
1. Will proceed in accordance with
the laws and regulations in the
future
2. Besides Remuneration Committee and the Audit
Committee, will the company established other
functional committees?
V
2. The Company has set up a remuneration
committee, and by the end of 2015, will
set up an audit committee. There is
no other plan to set up other functional
committees.
2. Will proceed in accordance with
laws and regulations in the future
3. Has the company established a regulation to
evaluate the performance of its Board of Directors
and methods of evaluation, and make evaluation of
the performance at regular intervals?
V
3. The company will establish it in the future
depending on the needs.
3. To be handled
4. Has the company regularly review the
independence of its CPA?
V
4. The CPA of the Company is not a
director, supervisor or shareholder of
the Company, and will comply with the
Certified Public Accountant Act and
the Code of Ethics for Professional
Accountants Bulletin No. 2.
4. None
D. Has the company set up communication channel
with stakeholders and set up stakeholder's area on
the company's website and appropriately respond
to corporate social responsibility issues that are of
concern to the stakeholders.
V
The company has set up a spokesman
in accordance with the rules, to act as a
communication channel with stakeholders
None
42
Item
Yes
E. Does the company appoint a professional stock
affairs agent for handling shareholders' meeting
affairs?
No
Explanation
V
The company has appointed Capital
Securities Corporation to act as its stock
affairs agent
None
1. Has the company set up a corporate website to
disclose information regarding the company's
¿QDQFLDOVDQGJRYHUQDQFH"
V
1. The company currently has disclosed
on its website, accessible to the public,
partial information on its financials and
has establish connections to MOPS
set up by the competent authority in
accordance with the regulations.
None
2. Has the company adopted other information
disclosure channels (such as have a English
website, assign specific person responsible for
disclosure matters, implement spokesman system,
display investor conference contents on the
company's website, etc.).
V
2. The company has set up spokesman
system and appoint dedicated person
responsible for collecting media reports
and disclose material information through
MOPS. In the future, the company will
continue to push for other disclosure
methods.
G. Does the company have other important information
to help to understand the operation situation of
corporate governance (including but not limited to
employee rights, employee care, investor relations,
stakeholder interests, continuing education of
directors and supervisors, risk management policies
and risk execution situation, the implementation of
the policy of the customer, the situation of banks
to buy liability insurance for the directors and
supervisors, donation to the parties, interested
parties and public interest groups, etc.)?
V
1. Continuing education of directors and
VXSHUYLVRUVWKHFRPSDQ\
VLQGHSHQGHQW
directors and supervisors all have
professional background, and have
attend continuing education courses
in accordance with regulations; In
addition, the company, from time to
time, will provide relevant information
and corporate governance and make a
special report.
F. Disclosure of Information
None
2. Attendance of the Board of Directors'
PHHWLQJ E\ GLUHFWRUV DQG VXSHUYLVRUV
Attendance situation is good.
3. The Company has purchased professional
liability insurance for its directors and
supervisors since 2007.
5 L V N P D Q D J H P H Q W 7 K H % R D U G R I
'LUHFWRUVKDVVHWXSDXGLWRI¿FHDQG5LVN
Management Office and will implement
matters in accordance with the relevant
rules.
5. Implementation of consumer or customer
SROLFLHV 7KH &RPSDQ\ KDV VHW XS DQ
0800 dedicated customer service call
center for customer management,
customer satisfaction survey and
handle customer complaints, in order to
properly determine the problem, clarify
accountability, regularly assess customer
satisfaction, and to ensure customers is
provide with the best level of service.
H. Does the company provides self-assessed
corporate governance report or commissioned other
professional institutions to the report? (If yes, please
stating the views of the Board of Directors, selfassessment or outsourcing evaluation results, the
main issues, recommendations, and improvement
situation)
V
The company will push for it depending on
the future needs.
To be handled
43
III
7DEOH'LUHFWRUVDQGVXSHUYLVRUV
FRQWLQXLQJHGXFDWLRQVLWXDWLRQ
Date for Attending Continuing
Education
Title
Name
Date of
Appointment
From
To
Hosted By
Course Subject
Hours
Chairman
Chien-Ping Chen
2014/11/13
2014/11/13
Taiwan Academy of
Banking and Finance
Operation of Directors and
Supervisors and corporate
governance
3
Director
Alex Ying
2007/10/31
2014/11/13
2014/11/13
Taiwan Academy of
Banking and Finance
governance
3
Director
Sunil Kaul
2014/11/13
2014/11/13
Taiwan Academy of
Banking and Finance
governance
3
Director
Sheau-Jin Lee
2014/11/13
2014/11/13
Taiwan Academy of
Banking and Finance
governance
3
Taiwan Academy of
Banking and Finance
governance
3
Taiwan Academy of
Banking and Finance
Supervision of trustee business
3
Director
Lin Sen Chen
2013/06/10
2014/11/13
2014/11/20
2014/11/13
2014/11/20
Independent
Director
Ming-Hsin Kung
2007/06/12
2014/11/13
2014/11/13
Taiwan Academy of
Banking and Finance
governance
3
Independent
Director
Joseph Tung
2007/10/31
2014/10/22
2014/10/22
Taiwan Securities
Association
The connection of Hong Kong and
Macau and its Impact to Taiwan
capital market
3
Independent
Director
Cheng Young Kao
2013/6/10
2014/11/13
2014/11/13
Taiwan Academy of
Banking and Finance
governance
3
Independent
Director
Joseph Fan
2007/10/31
2014/11/13
2014/11/13
Taiwan Academy of
Banking and Finance
governance
3
Supervisor
Sue Ho
2007/10/31
2014/11/13
2014/11/13
Taiwan Academy of
Banking and Finance
governance
3
Supervisor
Thomas Lee
2007/10/31
2014/11/13
2014/11/13
Taiwan Academy of
Banking and Finance
governance
3
44
(5) The Composition and Duties of the Remuneration Committee:
1. Information on the Members of the Remuneration Committee
Condition
Identity
(note1)
Name
Independent
Director
Joseph
Tung
Independent
Director
:KHWKHUKHVKHKDVDWOHDVW¿YH\HDUVRIZRUN
experience and meet one of the following
SURIHVVLRQDOTXDOL¿FDWLRQV
A judge, public
prosecutor,
attorney,
FHUWL¿HGSXEOLF
An instructor
accountant,
at a public
or other
Have work
or private
professional
experience
college, in a
or technical
in the area of
department
specialist, in
commerce,
of commerce,
a profession
ODZ¿QDQFH
ODZ¿QDQFH
necessary for
accounting,
accounting, or
the business of
or work
other academic
the Company,
experience
departments
who has
needed by the
related to the
passed a
Company
business of the
national
Company
examination
and been
awarded a
FHUWL¿FDWH
Independence Status (note 2)
1
2
3
4
5
6
7
8
Acting as
remuneration
committees
member of
other public
companies
Note
None
None
9
9
9
9
9
9
9
9
9
0
-
Ming-Hsin
Kung
Yes
None
9
9
9
9
9
9
9
9
9
1
-
Independent
Director
Cheng
Young Kao
None
Yes
9
9
9
9
9
9
9
9
9
0
1HZDSSRLQWPHQW
2014.3.27
Independent
Director
Joseph Fan
None
None
9
9
9 9 9 9 9 9 9
0
1HZDSSRLQWPHQW
2014.3.27
Director
Gregory
Zeluck
None
None
9
9
0
Term completion
RQ
Note
3
9
9
9
9
9
9
1RWH)RULGHQWLW\SOHDVH¿OOLQGLUHFWRUVLQGHSHQGHQWGLUHFWRUVRURWKHUV
1RWH&KHFNLQHDFKER[ZLWK9", if the committee member meets the condition during the two years prior to being appointed as the committee member and
GXULQJWKHWHUPRIRI¿FH
7KHPHPEHULVQRWDQHPSOR\HHRIWKH&RPSDQ\RUDQ\RILWVDI¿OLDWHGHQWHUSULVHV
7KHPHPEHULVQRWDGLUHFWRURUVXSHUYLVRURIWKH&RPSDQ\RUDQ\RILWVDI¿OLDWHGHQWHUSULVHV7KHVDPHGRHVQRWDSSO\KRZHYHULQFDVHVZKHUHWKH
person is an independent director of the Company, its parent company, or any subsidiary in which the Company holds, directly or indirectly, more than
50 percent of the voting shares.
(3) The member is not a natural-person shareholder who holds shares, together with those held by the person's spouse, minor children, or held by the
person under others' names, in an aggregate amount of one percent or more of the total number of issued shares of the Company or ranking in the top
10 in shareholdings.
(4) The member is not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the persons in the
preceding three subparagraphs.
7KHPHPEHULVQRWDGLUHFWRUVXSHUYLVRURUHPSOR\HHRIDFRUSRUDWHVKDUHKROGHUWKDWGLUHFWO\KROGV¿YHSHUFHQWRUPRUHRIWKHWRWDOQXPEHURILVVXHG
VKDUHVRIWKH&RPSDQ\RUWKDWKROGVVKDUHVUDQNLQJLQWKHWRS¿YHLQVKDUHKROGLQJV
7KHPHPEHULVQRWDGLUHFWRUVXSHUYLVRURI¿FHURUVKDUHKROGHUKROGLQJ¿YHSHUFHQWRUPRUHRIWKHVKDUHVRIDVSHFL¿HGFRPSDQ\RULQVWLWXWLRQWKDWKDV
D¿QDQFLDORUEXVLQHVVUHODWLRQVKLSZLWKWKH&RPSDQ\
(7) The member is not a professional individual who, or an owner, partner, director, supervisor, officer, or a spouse thereof, of a sole proprietorship,
SDUWQHUVKLSFRPSDQ\RULQVWLWXWLRQWKDWSURYLGHVFRPPHUFLDOOHJDO¿QDQFLDODFFRXQWLQJVHUYLFHVRUFRQVXOWDWLRQWRWKH&RPSDQ\RUWRDQ\DI¿OLDWHG
enterprises of the Company.
(8) The member does not meet any of the conditions set forth in Article 30 of the Company Act.
1RWH*UHJRU\ =HOXFN FRPSOLHV ZLWK 3DUDJUDSK RI$UWLFOH RI WKH 5HJXODWLRQV *RYHUQLQJ WKH$SSRLQWPHQW DQG ([HUFLVH RI 3RZHUV E\ WKH 5HPXQHUDWLRQ
Committee of a Company Listed on the Shares Exchange or Traded Over-the-Counter".
45
III
2. Duties of the Remuneration Committee
(1) Review and set the policy, system, standard and structure of remuneration of directors, supervisors and
managers regularly.
(2) Be in charge of the remuneration to directors, supervisors and managers.
3. Information on the Operations of the Remuneration Committee
(1) The Remuneration Committee consists of four members.
7KHWHUPVRIRIILFHWR7KH5HPXQHUDWLRQ&RPPLWWHHKDVFRQYHQHGPHHWLQJVL[WLPHV
LQWKHPRVWUHFHQWILVFDO\HDUDQGWKHPHPEHUV
DWWHQGDQFHUHFRUGLVVHWIRUWKEHORZ
Title
Name
Attendance in Person
Attendance By Proxy
Percentage of attendance
in person (%)
Convener
Joseph Tung
4
2
67%
Member
Ming-Hsin Kung
6
0
100%
Member
Cheng Young Kao
4
0
100%
1HZDSSRLQWPHQW
2014.3.27
Member
Joseph Fan
4
0
100%
1HZDSSRLQWPHQW
2014.3.27
Member
Gregory Zeluck
2
0
100%
&RPSOHWLRQRIWHUP
2014.3.17
Note
2WKHUPDWWHUVWKDWVKDOOEHUHFRUGHG
A. If the Board of Directors does not adopt or modify the recommendation of the Remuneration Committee, the Board shall record the date and term, subject
matter of motions, resolution, and measures taken concerning the recommendation of the Remuneration Committee (For example, if the compensation passed
E\WKH%RDUGRI'LUHFWRUVLVKLJKHUWKDQWKHUHFRPPHQGDWLRQSURSRVHGE\WKH5HPXQHUDWLRQ&RPPLWWHHWKH%RDUGVKDOOH[SODLQWKHGLIIHUHQFHVDQGUHDVRQV
None.
B. In the resolutions of the Remuneration Committee, if any member expresses objections or has reservations and has recorded such concerns, then the
5HPXQHUDWLRQ&RPPLWWHHVKDOOUHFRUGWKHGDWHWHUPVXEMHFWPDWWHURIPRWLRQVRSLQLRQVRILWVPHPEHUVDQGWKHPHDVXUHVWDNHQ1RQH
46
(6) Performance of Social Responsibility
The system adopted by, the measures taken, and the implementations by the Bank and its major subsidiaries on
environmental protection, community involvement, social contribution, social services, social welfare, consumer
rights, human rights, health and safety, and other social responsibility activities.
1. The Bank
Execution (Note1)
Item
Yes
No
Explanation (Note2)
A. Corporate governance
1. Whether the Bank has set up CSR policies or systems,
and reviewed the implementation performance?
V
1. Currently no, the Bank will study and plan for such in the
future.
2. Whether the Bank holds CSR education and training on a
regular basis?
V
future.
:KHWKHUWKH%DQNKDVVHWXS&65RI¿FHDQGDXWKRUL]HG
by the Board to manage the process, and report to the
Board?
V
4. Whether the Bank has set up reasonable salary
compensation policies and combined the staff performance
with CSR policy, and established clear and effective system
of reward and discipline?
V
Deviations from
the Principles
and Reasons
a&XUUHQWO\
no, the Bank
will study and
plan for such
in the future.
4.None
future.
4. The Bank has set up reasonable remuneration policies to
ensure that organizational strategic objectives and interests
of the stakeholders are met, at the same time, the Bank
has established clear system of reward and discipline
system to implement its CSR policy.
B. Sustainable development of environment
None
1. Whether the Bank puts efforts to promote efficiency of
utilization of resources, and use low environmental impact
of renewable materials?
V
7KH%DQNKDVXSGDWHGLWVOLJKWLQJ¿[WXUHVWR/('ZKLFKFDQ
UHGXFHHOHFWULFLW\FRQVXPSWLRQE\DERXWDQGUHTXLUHG
renovation manufacturers to use green building materials
2. Whether the Bank has established appropriate
environmental management system in according to its
industrial character?
V
2. The Bank has conducted gas carbon detection and
illumination detection on a regular basis.
3. Whether the Bank addresses concerns on climate change
on operating activities, and executes greenhouse gas
inventory, develops the Bank's strategy of reduction of
carbon emissions and greenhouse gas?
V
3. The Bank has conducted greenhouse gas checks since
2015.
47
III
Execution (Note1)
Item
Yes
No
Explanation (Note2)
C. Maintenance of social welfare
None
1. Whether the Bank developed management policies and
procedures in accordance with relevant regulations and
international conventions on human rights?
V
1. The Bank has established the policy and procedure, in
the condition of not violating so welfare, in accordance
with laws and regulations set up by the government or the
competent authorities.
2. Whether the Bank set up grievance mechanism for
employees?
V
2. The Bank has always placed importance on the legitimate
rights and interests of its employee and encouraged its
employees to giving suggestions to promote management
and labor harmony. When employees face work and
personal problems, they are encouraged to seek assistance
through normal channels. The Bank has established
related complaint channel internally to allow employees to
express and utilize.
3. Whether the Bank provided the employees with a safe and
healthy working environment, and implemented safety and
health education on a regular basis?
V
3. The Bank has always strived to provide a safe working
environment for its employees. Other than complying with
regulations to provide necessary facilities, it also provided
WUDQVSRUWDWLRQDUUDQJHPHQWVVWUHQJWKHQOLJKWLQJHTXLSPHQW
and other necessary assistance to employees working at
night. The Bank offered new employees work environment
safety and health education and training and provided
information related to work environment safety and health.
4. Whether the Bank established a regular communication
mechanism to inform employees, in a reasonable manner,
RSHUDWLRQDOFKDQJHVWKDWFDQKDYHDVLJQL¿FDQWLPSDFWRQ
the employees?
V
4. Same as 2 above; all business unites hold discussion
meeting regularly and the Bank holds labor conference in
HDFK TXDUWHU LQ DFFRUGDQFH ZLWK ODZV IRU UHJXODU ELODWHUDO
communication and discussion.
5. Whether the Bank established effective career development
and training program for its employees?
V
5. The Bank held programs catered to managers, branch
RI¿FHUVDQG0$WRGHYHORSYDULRXVSHUVRQQHOVXLWDEOHIRU
management. In relation to career development, based on
the relevant business needs, external lecturers and internal
lecturers are engaged in addition to the enforcement of
OJT. The Bank aims to provide assistance in terms of
career development based on employees' willingness to
commit.
6. Whether the Bank established relevant consumer protection
policy and complaint procedure for research, procurement,
operation and service procedures?
V
6.
(1) The Bank established “Consumer Protection Policy”
in accordance with “Manual for Corporate Governance
for Banks.” It governs the service and sale of financial
products, management of financial sales personnel,
information and risk disclosure, sales, and after sale
management, which are also in compliance of regulations
promulgated by the competent authority.
(2) The Bank has the 24 hours customer service center
ZKHUH WKH
customer can call the service center directly or leave a
message on the message board or online service counter
on website (www.tcbank.com.tw), where the Bank has
stationed dedicated personnel for immediate processing.
The Bank has set up “Procedures in Handling Complaints
of Consumers,” setting a SOP for different types of
complaint items. Each month, customer service units shall
compile the previous months “reports on customers
matters,” in address of important complaint cases. Each
unit's complaints shall be analyzed and remedial measures
be provided, and the matters should be report to“Financial
Consumer Dispute Review Committee.”
(3) The Bank has established Financial Consumer Dispute
Handing Standards and Financial Consumer Dispute
Handing Procedures in accordance with “Financial
Consumer Protection Act” and relevant laws to deal with
¿QDQFLDOFRQVXPHUGLVSXWHV
48
Deviations from
the Principles
and Reasons
Execution (Note1)
Item
Yes
7. Whether the Bank complied with relevant laws and
regulations and international standard for marketing and
labeling of products and services?
No
Explanation (Note2)
Deviations from
the Principles
and Reasons
7KH%DQNSURPRWHVWKH¿QDQFLDOSURGXFWVDQGVHUYLFHVLQ
accordance with “Financial Consumer Protection Act”
and “Procedures Governing Promotion and Solicitation for
Financial Service Providers.” While promoting, soliciting,
hosting marketing events, the Bank has upheld a sense of
PRUDOLW\LQWHJULW\DQGLQWKHLQWHUHVWRISURWHFWLQJ¿QDQFLDO
consumers, to ensure that the financial information is
DFFXUDWHDQGQRWPLVOHDGLQJ2EOLJDWLRQVRZHGWR¿QDQFLDO
consumers are no less than the obligations disclosed on
marketing materials. For financial products or services,
disclosure of interest, expenses, compensation and risks
are plain and explicit, and expressed in Chinese coupled
with original language, if applicable.
V
8. Whether the Bank made assessment on its suppliers, prior
to engagement, to check whether the supplier has bad
record on environmental and social impact?
V
8. Prior to engaging with its suppliers, the Bank makes
evaluation on the creditworthiness of the supplier. Where
WKHUHLVVLJQL¿FDQWLPSDFWWKHUHLVDFODXVHZKHUHWKH%DQN
can terminate the agreement. The Bank will work with the
/HJDO2I¿FHWRDPHQGFRQWUDFWWHPSODWHV
The Bank will
study and plan
for such in the
future.
:KHWKHUWKHFRQWUDFWVWKH%DQNKDVZLWKLWVPDMRUVXSSOLHUV
contained a clause where when the suppliers violate their
corporate social responsibility policies and cause major
negative impact on the environmental and society, the Bank
may terminate the contract?
V
7KH%DQN
VFXUUHQWFRQWUDFWWHPSODWHGRHVQRWFRQWDLQWKH
YLRODWLRQRI&65FODXVHDQGWKH/HJDO2I¿FHZLOOVWXG\DQG
amend the template.
The Bank will
study and plan
for such in the
future.
V
7KH%DQNZLOO¿QLVKDQGLVVXH&65UHSRUWEDVHGRQ*5,IRU
public reference.
The Bank will
disclose on its
website and on
the MOPS the
Bank's report
on CSR.
D. Disclose
1.Disclose the relevant information in its website and MOPS ？
E. Other deviations from the Bank's own CSR guidelines established in accordance with the “Corporate Social Responsibility Best Practice Principles for TWSE/
GTSM Listed Companies”7KH%DQNFXUUHQWO\KDVQRW\HWHVWDEOLVKHGD&65JXLGHOLQHDQGZLOOVWXG\DQGSODQIRUVXFKLQWKHIXWXUH
)2WKHULPSRUWDQWLQIRUPDWLRQWRKHOSXQGHUVWDQGWKHRSHUDWLRQVLWXDWLRQRI&653OHDVHVHH6HFWLRQV9DQG,9RIWKHDQQXDOUHSRUW
*&65UHSRUWDUHVXEMHFWWRYHUL¿FDWLRQE\WKHUHOHYDQWVWDQGDUGV7KH%DQNLVZULWLQJ&65UHSRUWEDVHGRQ*5,DQGWRYHUL¿FDWLRQE\WKHUHOHYDQWVWDQGDUGV
49
III
2. Ta Chong Securities
Execution (Note1)
Item
Yes
No
Explanation (Note2)
A. Corporate governance
1. Not yet
established
1. Whether the company set up CSR policies or systems, and
reviewed the implementation performance?
V
2. Whether the company holds CSR education and training
on a regular basis?
V
3. Whether the company has set up CSR office, and
authorized by the Board to manage the process, and report
to the Board?
V
7REHKDQGOHGE\WKH3UHVLGHQW
VRI¿FH
4. Whether the company has set up reasonable salary
compensation policies and combines the staff performance
with CSR policy, and establishes clear and effective system
of reward and discipline?
V
4. Remuneration Committee has been established.
B. Sustainable development of environment
Deviations from
the Principles
and Reasons
1. To be established in the future as needed.
2. Not yet
established
V
1. Whether the company is committed to enhancing the
efficiency of utilization of resources, and use the low
environmental impact of renewable materials?
2. To be established in the future as needed.
3. Will obtain
authorization
from the
Board in
the future to
handle this
matter.
The employees attended training provided by competent
DXWKRULW\DVUHTXLUHGDQGWKHFRPSDQ\KRVWVLQWHUQDOWUDLQLQJ
from time to time.
4. None
In Compliance with government regulations regarding air
temperature in public places. The Company is committed to
JDUEDJHFODVVL¿FDWLRQDQGUHSODFHVWKHSRZHUVDYLQJODPSV
(T5 lamps and LED lamps) and promotes the paperless
SDSHUZRUNDQGVHWVWKHDGPLQLVWUDWLYHRI¿FHDVWKH
responsible authority.
None
a+DQGOHGLQDFFRUGDQFHZLWKUHJXODWLRQV
a1RQH
a:LOOHVWDEOLVKLQWKHIXWXUH
a7REH
handled
2. Whether the company established appropriate
environmental management system in according to its
industrial character?
3. Whether the company assesses the impact of climate
change on operating activities, and execute the
greenhouse gas inventory, develop the company's strategy
of reduction of carbon emissions and greenhouse gas?
C. Maintenance of social welfare
50
1. Whether the company develops management policies and
procedures in accordance with relevant regulations and
international conventions on human rights?
V
2. Whether the company has set up grievance mechanism for
employees?
V
3. Whether the company provides the employees with a safe
and healthy working environment, and implemented safety
and health education on a regular basis?
V
4. Whether the company has established a regular
communication mechanism to inform employees, in a
reasonable manner, operational changes that can have a
VLJQL¿FDQWLPSDFWRQWKHHPSOR\HHV"
V
5. Whether the company has established effective career
development and training program?
V
6. Whether the company has established relevant consumer
protection policy and complaint procedure for research,
procurement, operation and service procedures?
V
7. Whether the company complied with relevant laws and
regulations and international standard for marketing and
labeling of products and services?
V
8. Whether the company made assessment on its suppliers,
prior to engagement, to check whether the supplier has
bad record on environmental and social impact?
V
:KHWKHU WKH FRQWUDFWV WKH FRPSDQ\ KDV ZLWK LWV PDMRU
suppliers contained a clause where when the suppliers
violate their corporate social responsibility policies and
cause major negative impact on the environmental and
society, the company may terminate the contract?
V
Execution (Note1)
Item
Yes
D. Disclose
No
V
Explanation (Note2)
The Company will issue CSR report by the end of 2015 for
public reference.
Deviations from
the Principles
and Reasons
To be handled
1. Disclose the relevant and reliable CSR information on its
website and MOPS ？
E. Other deviations from the company's own CSR guidelines established in accordance with the “Corporate Social Responsibility Best Practice Principles for
TWSE/GTSM Listed Companies”7KHFRPSDQ\ZLOOLQDFFRUGDQFHZLWKODZVDQGUHJXODWLRQVHVWDEOLVK&65JXLGHOLQHDQGLPSOHPHQWLWLQWKHIXWXUH
)2WKHULPSRUWDQWLQIRUPDWLRQWRKHOSXQGHUVWDQGWKHRSHUDWLRQVLWXDWLRQRI&65
7KH LQWHUHVWV RI HPSOR\HHV HPSOR\HH DFWLYLWLHV LPSOHPHQWDWLRQ RI JHQGHU HTXDOLW\ V\VWHP )DFLQJ GRPHVWLF DQG LQWHUQDWLRQDO HFRQRPLF FULVLV DV IDU DV
position adjustment to ensure the right of work.
&RPPXQLW\UHVSRQVLELOLW\QHLJKERUKRRGVHUYLFHVVXFKDVFOHDQLQJWKHSDUNVUHJXODUO\VSRQVRUV<LPLQWHPSOHLQ6DQPLQ'LVWULFW.DRKVLXQJ&LW\GRQDWLRQV
to orphanages.
+XPDQLWDULDQFDUHFDUHLQUHPRWHDUHDVDQGYXOQHUDEOHSHUVRQVDQGJLYHWLPHO\DVVLVWDQFHDQGFRQGROHQFHV
*,IWKHFRPSDQ\
V&65UHSRUWDUHVXEMHFWWRYHUL¿FDWLRQE\WKHUHOHYDQWVWDQGDUGVGHVFULSWLRQVVKDOOEHSURYLGHG1RQH
51
III
(7) Status on the implementation of ethical corporate conduct
Execution (Note1)
Item
Yes
No
Explanation (Note2)
7KH%DQN
A. Ethical corporate conduct policy
1. Whether the Bank and its major subsidiaries have
expressed in bylaws and external documents of its policy,
method of ethical corporate conduct, and the Board and
management's commitment to comply with such policy?
V
1. The Bank has established the “Ethical Corporate
Management Best Practice Principles” and discloses it on
LWVZHEVLWHZZZWFEDQNFRPWZ
2. Whether the Bank and its major subsidiaries have
established procedures to prevent unethical conducts,
with explicit operating procedures, behavior guidelines,
disciplinary and complain system and implement such
policy?
V
2. The Bank has planned preventive measures.
3. Whether the Bank and its major subsidiaries adopted
preventive measures for the matters set forth in Paragraph
2 of Article 7 of "Ethical Corporate Management Best
Practice Principles for TWSE/GTSM Listed Companies"
and for business activities with higher unethical conduct
risk in other scope of business activities?
V
7KH SUHYHQWLYH PHDVXUHV DGRSWHG E\ WKH %DQN LQFOXGH
bribery, offering illegal political contributions, improper
charitable donations or sponsorship, unreasonable offer or
JLIWVHQWHUWDLQPHQWRURWKHULPSURSHUEHQH¿WV
7D&KRQJ6HFXULWLHV
52
V
1. The company has clearly described the company's principal
to conduct in ethically in the annual report and operational
plans of each department, and to be followed by its
employees.
V
2. All the company's employees know the principle of ethical
conduct when they sign the labor contract and have
executed relevant affidavit. The relevant information is
available on the internal company website. The company
also reiterates the principles during trainings, motivating all
employees to abide by such principle.
V
3. The company prohibits its employees from receiving illegal
EHQH¿FLDOLQWHUHVWVDFFHSWVKRVSLWDOLW\JLIWVNLFNEDFNVRU
misappropriates or embezzles company fund, or schemes
IRUWKHLURZQEHQH¿WV(PSOR\HHVRUMREVHHNHUVZKRKDYH
been indicted will not be hired.
Deviations from
the Principles
and Reasons
7KH%DQN
None
Ta Chong
6HFXULWLHV
None
Execution (Note1)
Item
Yes
No
Explanation (Note2)
7KH%DQN
B. Implementation of Ethical Business Conduct
1. As set forth in the “Ethical Corporate Management Best
Practice Principles” when entering into contracts, the
Bank shall abide by the principles and inserts termination
provisions which provide for termination when the
counterparty conducts unethically.
1. Whether the Bank and its major subsidiaries considered
their counterparties' ethical records, and in contracts with
its trading counterparties, set forth a provision on ethical
conduct?
V
2. Whether the Bank and its major subsidiaries set up a
dedicated unit, under the Board of Directors, that is in
charge of promoting corporate ethical conducts? Has the
unit reported the policy implementation status to the Board
of Directors regularly?
V
2. Establish a responsible unit for such matter under the
Board of Directors which reports to the Board on a regular
basis on the implementation status.
3. Whether the Bank and its major subsidiaries established
SROLFLHVWRSUHYHQWFRQÀLFWRILQWHUHVWSURYLGHGDSSURSULDWH
channels to receive statements, and implemented the
policies?
V
3. The “Ethical Conduct Standards” established by the
%DQNVHWIRUWKDSSURSULDWHPHFKDQLVPWRSUHYHQWFRQÀLFWRI
interest, and have the employee suggestion mailbox and
service counter online for reporting.
4. Whether the Bank and its major subsidiaries established
effective accounting and internal control systems for the
implementation of ethical business conduct, and engaged
an internal audit unit to audit the systems regularly or
engaged accountants to carry out the audits?
V
4. The Bank has established effective accounting system
and internal control system, and has solidly enforced the
systems. Each year, internal audit is conducted against
all units. Relevant internal audit report is forwarded to the
Board of Directors in accordance with “Implementation
Rules of Internal Audit and Internal Control System of
Financial Holding Companies and Banking Industries”.
5. Whether the Bank and its major subsidiaries hold the
education and training on ethical business conducts on a
regular basis?
V
1. The company’s procurement matters are conducted in
accordance with procedures for procurement. Any suppliers
with a dishonest background will be blacklisted in the
database, for the purpose of evaluating future businesses.
For transactions and purchases, interested parties
are recused and may not participate. Due diligence is
conducted to see if the person is an actual interested party,
to fairly uphold the policy.
V
2. The president is responsible for this matter and the audit
office, legal office, management department, financial
department and risk management department will work
together and report to the Board upon the occurrence of
any major events.
V
3. Employee may report through website, mailbox of the
FRPSDQ\ DQG +5 RI¿FH DQG WKH ',' RI SUHVLGHQW HWF RU
report to their direct supervisors.
V
4. The company reviews its business in accordance with
Company Act, Securities and Exchange Act, Business
Accounting Law and relevant laws semiannually to ensure
regulatory compliance. The company passed the internal
audit rule and principle for employees to follow and use
spirit of "Ethical Corporate Management Best Practice
Principles for TWSE/GTSM Listed Companies" as a basis
to implement ethical business conduct.
V
7KH%DQN
a1RQH
7REH
handled
5. To be established in the future.
7D&KRQJ6HFXULWLHV
V
Deviations from
the Principles
and Reasons
Ta Chong
6HFXULWLHV
a1RQH
7REH
handled
5. To be established in the future based on needs.
53
III
Execution (Note1)
Deviations from the Principles
and Reasons
Item
Yes
No
C. Operational status of the Bank and its major subsidiaries'
UHSRUWLQJPHFKDQLVP
Explanation (Note2)
7KH%DQN
7KH%DQN
a1RQH
7REHLPSOHPHQWHG
1. Whether the Bank and its major subsidiaries set specific
report and reward system, and assign appropriate specialist
staff for it?
V
1. The Bank has established employee
suggestion mailbox and reports may be
made on the customer service center and
investor mailbox on the website (www.
tcbank.com.tw)
2. Whether the Bank and its major subsidiaries set up
LQYHVWLJDWLRQVWDQGDUGSURFHGXUHVDQGUHODWHGFRQ¿GHQWLDOLW\
protection mechanisms?
V
2. The Bank has established the standards
for handling customer complaints, and the
SOP for accepting reports and making
investigations and related confidential
system.
3. Whether the Bank and its major subsidiaries set up
measures to protect whistleblowers from improper
treatments because of the reporting?
V
3.Other measures to be established in the
future
7D&KRQJ6HFXULWLHV
V
1. Employee may report through website,
PDLOER[RIWKHFRPSDQ\DQG+5RI¿FHDQG
the DID of the president or report to their
direct supervisors.
V
Whether the Bank and its major subsidiaries have published
the contents of their "Ethical Corporate Management Best
Practice Principles" and its implementation on the on their
website and MOPS?
3. Other measures to be established in the
future
7KH%DQN
V
7KH%DQN
None
Published the "Ethical Corporate Management
Best Practice Principles" and "Ethical Conduct
Standards" on www.tcbank.com.tw and MOPS.
7D&KRQJ6HFXULWLHV
V
7REHLPSOHPHQWHG
2. The president will host major HR meeting
for the discussion rewards and penalties of
employee and make announcements on the
website and send notice through letters to
all employees.
V
D. Enhance Information Disclosure
7D&KRQJ6HFXULWLHV
a1RQH
7D&KRQJ6HFXULWLHV
None
published relevant information under the
section of “about TC” on www.tcsc.com.tw
and appoint the responsible person through the
SUHVLGHQW
VRI¿FHWRDGGUHVVUHODWHGFRQFHUQV
E. If the Bank or any of its major subsidiaries has established "Ethical Corporate Management Best Practice Principles" in accordance with "Ethical Corporate
0DQDJHPHQW%HVW3UDFWLFH3ULQFLSOHVIRU7:6(*760/LVWHG&RPSDQLHVSOHDVHGHVFULEHGDQ\GLIIHUHQFHVEHWZHHQWKHWZR1RQH
)2WKHULPSRUWDQWLQIRUPDWLRQWRKHOSRQHXQGHUVWDQGVWKH%DQN
VLPSOHPHQWDWLRQVWDWXVRIHWKLFDOEXVLQHVVFRQGXFW1RQH
Subsidiary listed in the charts above is Ta Chong Securities Co., Ltd.
(8) Information of Banking Practice Governance Rule and related rules
3OHDVH VHH 0DUNHW 2EVHUYDWLRQ 3RVW 6\VWHP KWWSHPRSVWZVHFRPWZHPRSVBDOOKWP DQG RIILFLDO ZHEVLWH
KWWSZZZWFEDQNFRPWZ
(9) Other important information
3OHDVH VHH 0DUNHW 2EVHUYDWLRQ 3RVW 6\VWHP KWWSHPRSVWZVHFRPWZHPRSVBDOOKWP DQG RIILFLDO ZHEVLWH
KWWSZZZWFEDQNFRPWZ
54
(10) Summary of the internal control system
1. Internal Control Statement
Ta Chong Bank Statement of Internal Control
On behalf of Ta Chong Bank (the "Bank"), we hereby declare that from January 1, 2014 to December 31, 2014, the Bank
has indeed complied with the Implementation Rules of Internal Audit and Internal Control System of Financial Holding
Companies and Banking Industries to establish internal control systems and implement risk management, with an
independent audit department conducting audits and report to the Board of Directors and supervisors on a regular basis.
For securities business, the Bank complies with Regulations Governing the Establishment of Internal Control Systems
by Service Enterprises in Securities and Futures Markets to assess the effectiveness of design and execution of internal
control by means of the items stated herewith. After careful evaluation, internal control and legal compliance matters were
effectively implemented by each unit this year, except for the matters set forth in the attached tabled. This Statement shall
become part of the Bank's Annual Report and Prospectus; both shall be publicized. If there are any untruths or conceal
items violating the laws in the publicized contents, legal liabilities will result under Article 20, 32, 171, and 174 of the
Securities and Exchange Act.
Addressed respectfully to
The Financial Supervisory Committee of the Executive Yuan
Declared by
Chairman　（Seal）
President　（Seal）
Chief Auditor　（Seal）
Legal and Compliance Head　（Seal）
Dated March 26, 2015
55
III
,QWHUQDO&RQWURO6\VWHP5HLQIRUFHPHQWDQG,PSURYHPHQW3ODQ
Ta Chong Bank Internal Control System Items that shall be Reinforced and Improved
December 31, 2014
Item to Reinforce
Improvement Measures
7KH%DQNZKHQKDQGOLQJ¿QDQFLDOSURGXFWVPDUNHWLQJ
business, does not duly establish appropriate internal
control system or has inappropriate matters or
execution, and the competent authority fine the Bank
SXUVXDQW WR WKH SDUDJUDSK RI VHFWLRQ RI WKH
Banking Act where the matter shall be corrected in
accordance with item 1 of article 61-1 of the Banking
$FWZKLFKOLVWVDVIROORZLQJ
1.Shall duly perform the KYC and KYP
Expected date of completion
&RPSOHWHGRQ-DQXDU\
1. To perform KCY and KYP, the Bank has done the
IROORZLQJLPSURYHPHQWV
(1) Shall set up hedging and non-hedging transactions
assessment system to properly reflect customer
risk tolerance and trading purposes.
(1) The Bank has revised the standards of risk
limitation and related control system, and based
on customer risk tolerance, business demand
for hedging, and other matters to properly
determine the hedging and non-hedging
demand.
(2) Shall set up regulation for customers’ assessment
to avoid customers from excessive risk.
7KH%DQNKDVUHYLVHGWKH³7D&KRQJ%DQN¶V.H\
Points for the Sale of Derivatives or Financial
,QVWUXPHQWV WR &RUSRUDWH &XVWRPHUV³ DQG
³'HULYDWLYHVRURWKHU)LQDQFLDO&RPPRGLW\5LVN
&ODVVLILFDWLRQ &ULWHULD ³DQG WKH LQGHSHQGHQW
checking system and the revised financial
FRPPRGLW\WUDGLQJTXHVWLRQQDLUH
(3) Shall set up derivatives business operations
provisions of financial business branches in
accordance with laws.
(3) 7KH %DQN KDV VHW XS WKH ³2SHUDWLQJ *XLGHOLQH
for Handling of Derivatives Business by OBU"
to comply with laws and regulations.
2. To protect the interests of customers, the transaction
process system shall be established, and to disclose
the product information and risk in the contract
properly.
2. The Bank has revised the "Rule Managing
Offset Transactions by Corporate Customers"
to strengthen offset transaction process system
and amend the "Trading Conditions and Product
6SHFL¿FDWLRQDQG7UDGH&RQ¿UPDWLRQLQRUGHU
to fully disclose the product information and inform
risk.
6KDOOVHWXSWKHGHULYDWLYHVVDOHVVWDIITXDOL¿FDWLRQV
and sales activity control system.
3. The Bank has set up "Trading Regulation for
Personnel of the of Financial Market Department",
WKDWUHTXLUHVQHZ702VWDIIVKDOOFRPSO\ZLWKWKH
TXDOLILFDWLRQV EHIRUH VWDUWLQJ WKH EXVLQHVV 7KH
sales staff has been instructed that the RM who
GRHV QRW TXDOLI\ XQGHU WKH 'LUHFWLRQ IRU %DQNV
&RQGXFWLQJ¿QDQFLDO'HULYDWLYH%XVLQHVVVKDOOQRW
sell or explain the derivatives to customers.
4. Shall regularly review and adjust the risk assessment
of financial products, in order to reflect significant
changes in the market, and enhance the effectiveness
of credit risk management.
4. The Bank has conducted its 2014 regular review
and risk weighing assessment of its financial
products
3. If the Bank has retained a certified public accountant to review its internal control systems, the CPA' s report
VKDOOEHUHYHDOHG1$
56
(11) The penalties imposed for violations of laws or regulations and the major deficiencies of the Bank
during the last two years, and the corrective measures taken:
1. Any responsible person or officer prosecuted for business crimes.None
2. Any fine by the Financial Supervisory Commission for violations against regulations.
5HDVRQV 7KH %DQN ZKHQ FRQGXFWLQJ ILQDQFLDO SURGXFWV PDUNHWLQJ EXVLQHVV GLG QRW GXO\ HVWDEOLVK
appropriate internal control system or had inappropriate matters or execution, which violated item 1 of
VHFWLRQRIWKH%DQN$FWDQGEDVHGRQWKHSDUDJUDSKRIVHFWLRQRIWKHVDPHDFW7KH%DQN
ZDVILQHG17PLOOLRQDQGUHTXLUHGWRPDNHFRUUHFWLRQLQDFFRUGDQFHZLWKLWHPRIDUWLFOHRIWKH
Banking Act.
,PSURYHPHQW 7KH %DQN KDV IROORZHG WKH FRPPHQWV RI WKH FRPSHWHQW DXWKRULW\ DQG UHYLVHG regulations related to operation and system, and has executed KYC, KYP, customer protection,
management of sales staff and risk, etc.
3. Corrected by the Financial Supervisory Commission for violations against regulations:
Same as above.
4. Punished by Financial Supervisory Committee in accordance with Article 61-1 of The Banking Act:
Same as above.
5. In the event of individual or total loss of more than NT$50 million for the fiscal year, due to employee
corruption, major incidents (fraud, theft, embezzlement, falsified transactions, forged certificates and
securities, receiving commissions, losses due to natural disasters, losses caused by external forces, attacks
or theft of information by hackers, or disclose of business secrets or customer information and such), or
failure to effectively implement security maintenance, the event nature and the amount of the loss should be
disclosed:
None
2WKHULQIRUPDWLRQUHTXLUHGE\WKH)LQDQFLDO6XSHUYLVRU\&RPPLWWHHWREHGLVFORVHG:
None
(12) The important board resolutions and shareholders resolutions in the previous year and this year
up to date the annual report is published:
1. 6KDUHKROGHUV0HHWLQJ
(1) Approved the distribution of surplus of 2013
5HVROXWLRQ7KHGLVWULEXWLRQRIVXUSOXVRIFRYHUHGERQXVHVWRFRPPRQVKDUHVDQGSUHIHUUHGVKDUH
LQ WKH DPRXQW RI SHU VKDUHV VKDUH GLYLGHQG LV RI SUHIHUUHG VKDUH
C; employee bonus is $22,500,000 and remuneration of director and supervisor is $36,000,000 (deduct
from net income of 2013).
(2) Approved the capital increase out of earnings of 2013
5HVROXWLRQ 7KH QXPEHU RI VKDUHV LVVXHG WKURXJK FDSLWDO LQFUHDVH RXW RI HDUQLQJV RI LV
VKDUHV DQG WKH VKDUHV ZHUH DOORFDWHG LQ SURSRUWLRQ RI VKDUHKROGLQJ LQGLFDWHG RQ WKH
register of members as of dividend and rights removal record date. For each 1000 shares 80 shares is
DOORFDWHGDQGWKHVKDUHDJHQWKDVGRQHDW
57
III
(3) Established the minor credit loan company in China through the Company's subsidiary Ta Chong
International Leasing Co., Ltd.
5HVROXWLRQ ,Q FRQVLGHUDWLRQ RI FKDQJH LQ &KLQD WKH FUHGLW ULVN KDV ULVHQ EDVHG RQ %ORRPEHUJ QHZV
7DLZDQHVH EDQNV KDYH UHGXFHG RI WKH ORDQ WR &KLQD FRPSDQLHV WKH LQYHVWPHQW KDV EHHQ
suspended.
(4) Approved the private placement of overseas convertible financial debentures
5HVROXWLRQEHFDPHOLVWHGLQ6LQJDSRUHDW
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International Leasing Co., Ltd.
58
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in Hong Kong.
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2013
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about share dividend of Class C preferred shares
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Kong branch.
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Hong Kong branch and review the relevant applications.
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relevant applications.
59
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Team under the Board, and amend their organization rules and scope of authority.
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Money Laundering and Anti-Terrorism Operation Rules for Securities Division”.
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60
(14) 2014.7.29 3rd Interim Board Meeting of 9th Term
■ Approved the private placement of overseas convertible debentures matters.
(15) 2014.1.22 20th Board Meeting of 9th Term
■ Approved the budget for 2015 credit card issuance matter.
■ Approved for Subordinated financial debentures in the amount of NT$60 billion.
■ Approved the Hong Kong branch matters.
■ Established the “Micro Corporate Finance Review Rules”.
■ Applied to FSC for online transactions project.
■ Approved the shareholders meeting of 2015.
■ Approved the assessment analysis report of advisory board of 2014.
■ Approved the performance bonus of President Justin Tsai of 2014.
■ Approved the performance bonus of 2014, assignment of treasury stock to employees, and the
employee stock option.
■ Approved the employee stock option for key members for 2014.
■ Approved the stock option base on incentive plan of 2014.
(16) 2014.3.26 21th Board Meeting of 9th Term
■ Appointed representative of corporate director of re-investment entity Ta Chong Securities.
■ Apply for upgrading three simple branches into general branches.
■ Approved the “Internal Control Statement” of 2014.
■ Approved the assessment of independence of CPA
■ Approved the individual and consolidated financial statements of 2014.
■ Approved the distribution of surplus of 2014
■ Approved the plan of financial product for the upcoming 1-3 years.
■ Approved the business report of 2015.
■ Amended the investment in Ta Chong International Leasing Co., Ltd. and suspend the investment of
micro credit company in China.
■ Approved the private placement of overseas convertible debentures and report to shareholders
meeting.
■ Approved the Banking Act Article 25 propaganda and report to shareholders meeting.
■ Approved the distribution of surplus of 2014 and report to shareholders meeting.
■ Approved the “Repayment Plan of NPL Including Chinfon Trading Group”
■ Approved the performance bonus of 2014, transfer of treasury stock to employees, actual
subscription list, and number of shares transferred.
■ Approved the remuneration of chairman, vice chairman, directors and supervisors.
(13) The recorded different opinion of directors and supervisors of important board resolution and
shareholders resolution in the previous year and this year up to the date the annual report is
published:
None
(14) The resignation of financial report related person (including director, president, financial leader,
accounting leader and internal audit leader, etc.) in the previous year and this year up to the date
the annual report is published:
None
61
全_2014大眾英文年報=參_III Corporate Governance.indd 61
2015/5/22 下午 02:50:30
III
5. Public Expenses of Accountants
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Accountant Firm
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Chen-Hsiu Yang
Audit Period
Kuan-Chung Lai
a
Auditing fee
Non-auditing fee
Remarks
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Expense Item
Classes
Total
1
Under $2,000,000
-
-
-
2
LQFOXGLQJa
-
-
-
3
LQFOXGLQJa
-
5,440
5,440
4
LQFOXGLQJa
-
5
LQFOXGLQJa
-
-
-
6
$10,000,000 and more
-
-
-
,IWKHQRQDXGLWIHHSDLGWRFHUWL¿HGSXEOLFDFFRXQWDQWVWKHDFFRXQWLQJ¿UPRULWVDVVRFLDWHGFRPSDQ\KDV
reached 1/4 of audit fee, the fee amount for both and the non-audit service contents should be disclosed:
Non-Audit
Accountant
Firm
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Touche
CPA
Auditing
Fee
System
Design
Manufacturer
Registration
HR
Others
(see
Subtotal
Remarks)
Accounting
Period
Chen-Hsiu
Yang
0
0
0
5,440
13,360
a
Kuan-Chung
Lai
Remarks
Others are the
service fee for
conducting
internal control
audit
,I WKH DFFRXQWLQJ ¿UP LV FKDQJHG DQG WKH SDLG DXGLW IHH LV OHVV WKDQ WKDW RI SUHYLRXV ¿VFDO \HDU WKHQ the
reduced amount, percentage and reasons should be disclosed:
N/A
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by 15 percent or more, the reduced amount, percentage and reasons should be disclosed:
N/A
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CPA Cheng-Hsiu Yang and CPA Kuan-Chung Lai are replaced with CPA Chen-Hsiu Yang and CPA Jun Kung.
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and position of the person, and the post period should be disclosed:
N/A
62
8. Directors, Supervisors, Managers through same person, or same affiliated person holding the
same bank's shares with voting right over a certain percentage must declare changes to the
shareholding or pledges:
(1) Changes to Equity
A. Directors and Supervisors
2014
Title
Name
Category
Chairman
Fonbao Financial Management Ltd.
5HSUHVHQWDWLYH&KLHQ3LQJ&KHQ
Common
Vice Chairman
3HL.DQJ/LPLWHG5HSUHVHQWDWLYH
Gregory Zeluck
Common Shares of
Private Placement
Director MajorShareholder
Same person or same
interested person
Kwang Yang Motor Co., Ltd
5HSUHVHQWDWLYH/LQ3RQJ5RQJ
Director
Increase/
decrease to
shares held
Prior to 2015.02.28
Increase/
decrease to
shares pledged
Increase/
decrease to
shares held
Increase/
decrease to
shares pledged
813,161
0
0
0
3
0
0
0
Common
0
0
0
5HSUHVHQWDWLYH6KX+XL+XDQJ&KHQ
Common
0
0
0
Director MajorShareholder
Same person or same
interested person
5HSUHVHQWDWLYH<X)HQJ.R
Common
0
0
0
Director
Pei Kang Limited
5HSUHVHQWDWLYH$OH[<LQJ
Common Shares of
Private Placement
0
0
0
0
Director
Pei Kang Limited.
5HSUHVHQWDWLYH6KHDX-LQ/HH
Common Shares of
Private Placement
0
0
0
0
Director
Pei Kang Limited.
5HSUHVHQWDWLYH6XQLO.DXO
Common Shares of
Private Placement
0
0
0
0
Director
Pei Kang Limited.
5HSUHVHQWDWLYH/LQ6HQ&KHQ
Common Shares of
Private Placement
0
0
0
0
Joseph Tung
Common
0
0
0
0
Joseph Fan
Common
0
0
0
0
Ming-Hsin Kung
Common
0
0
0
0
Cheng Young Kao
Common
0
0
0
0
Supervisor
%R:HL/WG5HSUHVHQWDWLYH6XH+R
Common Shares of
Private Placement
20
0
0
0
Supervisor
Chin Yu Investment Co., Ltd
5HSUHVHQWDWLYH7KRPDV/HH
Common
358,255
0
0
0
Major Shareholder
Same person or same
interested person
Kuang Hsin Enterprise
Common
3,015,353
0
0
0
Same person or same
interested person
Hung-Ming Ko
Common
Same person or same
interested person
Shu-Yuan Wang Ko
Common
Same person or same
interested person
Same person or same
interested person
Same person or same
interested person
Same person or same
interested person
Same person or same
interested person
Major Shareholder
Same person or same
interested person
55,747
0
0
0
(8,000,000)
0
0
0
115,280
0
0
0
(10,000,000)
0
0
0
Sheng-Feng Ko
Common
23,257
0
0
0
Yu-Feng Ko
Common
235,565
0
0
0
Kuang-Feng Ko
Common
78,217
0
0
0
Common
532,634
0
0
0
Common
0
0
0
Common
631
0
0
0
Common Shares of
Private Placement
0
0
Common Shares of
Private Placement
0
0
Ming Feng Investment
Co., Ltd.
Xin Sheng Investment
Co., Ltd.
Zhong Xi Co., Ltd.
5HSUHVHQWDWLYH
Gregory Zeluck
Based on the data in Shareholders' Registration Book of latest date of shares transfer suspension (2014/07/28).
63
III
B. Managers
2014
Name
Title
Justin Tsai
President
Ming-Hsiu Tsai
Chief Auditor
Ya-Ping Zhuang
Senior Executive
Vice President
Charles Hsieh
Niel Chang
Leon Kuo
Loo-Fei Huang
Kevin Chen
Ena Suei
Senior Executive
Vice President
Senior Executive
Vice President
Senior Executive
Vice President
Senior Executive
Vice President
Senior Executive
Vice President
Senior Executive
Vice President
Increase/ decrease in
shares held
shares pledged
shares held
shares pledged
0
0
(1,800,000)
0
0
0
421,262
0
326,271
0
0
663,622
0
0
(10,000)
0
446,188
0
461,036
0
(360,000)
0
(40,000)
0
634,668
0
0
0
(225,000)
0
325,201
0
283,714
0
(360,000)
0
0
0
226,700
0
0
(117,000)
0
0
0
181,810
0
141,857
0
0
0
0
0
127,671
0
(240,000)
0
0
0
Victor Chen
Senior Executive
Vice President
136,000
0
177,321
0
Indra Huang
Senior Executive
Vice President
275,451
0
0
Kris Hung
Senior Executive
Vice President
152,510
0
130,508
0
John Chou
Senior Executive
Vice President
215,156
Eileen Wei
Executive Vice
President
Johnson Chang
Executive Vice
President
Joe Chou
Terry Tsai
Vincent Lai
64
Prior to 2015.02.28
Executive Vice
President
Executive Vice
President
Executive Vice
President
0
188,315
0
(88,000)
0
0
0
323,718
0
126,640
0
0
(117,000)
0
0
0
411,653
0
425,572
0
(411,653)
0
(27,000)
0
158,851
0
0
(180,000)
0
(45,000)
0
188,445
0
0
(140,000)
0
0
0
2014
Name
Title
Anna Wu
Executive Vice
President
Edward Tyane
Tracy Chu
Han-Qing Chang
Milly Chen
Rita Liang
Executive Vice
President
Executive Vice
President
Executive Vice
President
Executive Vice
President
Executive Vice
President
shares held
Prior to 2015.02.28
shares pledged
shares held
shares pledged
142,533
0
0
(130,000)
0
0
132,678
0
76,617
0
0
0
(7,000)
0
140,604
0
124,125
0
(137,000)
0
(36,000)
0
47,753
0
0
(36,000)
0
0
0
0
212,786
0
0
0
0
235,062
0
354,643
0
(235,062)
0
(70,000)
0
Jia-Yu Li
Executive Vice
President
105,482
0
64,272
0
Erh-Ke Tung
Executive Vice
President
0
0
Executive Vice
President
0
121,642
0
Shao-Hung Wu
(127,000)
0
0
0
152,381
0
133,345
0
0
0
0
77,580
0
68,307
0
(18,000)
0
0
0
Peter Chiou
Pei-Zhen Tsai
Executive Vice
President
Executive Vice
President
Shi-Fang Xu
Executive Vice
President
85,060
0
141,857
0
Yong-Chi Wang
Executive Vice
President
0
0
163,135
0
Terry Gung
Executive Vice
President
0
37,202
0
Eric Yang
Executive Vice
President
110,760
0
0
Hui-Zhen Xiao
Executive Vice
President
0
0
0
Executive Vice
President
56,836
0
51,423
0
Johnson Chung
(73,000)
0
(30,000)
0
Hsiu-Mei Li
Executive Vice
President
0
0
237,543
0
Li-Ya Wu
Executive Vice
President
0
0
70,112
0
65
III
2014
Name
Title
Wen-Hsin Huang
Senior Vice
President
Chih-Han Tsai
Senior Vice
President
Kuan-Lan Chin
Senior Vice
President
shares pledged
shares held
shares pledged
0
0
0
0
(30,000)
0
(3,303)
0
0
35,464
0
(24,000)
0
(16,000)
0
Sharon Feng
Senior Vice
President
0
76,014
0
Yu Mei Yang
Branch Manager
0
0
Shu Yueh Lin
Branch Manager
0
0
0
51,112
0
0
Shu Mei Lin
Branch Manager
(51,112)
0
0
0
0
18,448
0
0
0
0
0
0
22,768
0
0
0
(20,000)
0
0
62,625
0
(54,000)
0
(54,000)
0
Yi Shan Li
Hui Yu Lin
Chi Nan Yang
Branch Manager
Branch Manager
Senior Vice
President
Meng Chao Tsai
Branch Manager
13,063
0
0
Hsiao Ying Kuo
Branch Manager
0
0
17,022
0
Senior Vice
President
0
0
Miao Ling Wu
(36,000)
0
0
0
0
38,173
0
16,321
0
20,825
0
(16,000)
0
0
0
0
0
12,881
0
17,140
0
0
(17,140)
0
13,041
0
53,716
0
0
0
0
0
0
Pao Lin Wang
Branch Manager
Chih Hui Chang
Branch Manager
Chien An Chen
Branch Manager
Shuen Chi Chang
Branch Manager
66
shares held
Prior to 2015.02.28
Hui li Pai
Senior Vice
President
Hsueh Ping Yeh
Branch Manager
2014
Name
Title
Su Ning Chang
Branch Manager
Shu Hui Chen
Yung Lung Chan
shares pledged
shares held
shares pledged
46,350
0
38,478
0
(24,000)
0
0
0
42,518
0
0
(36,000)
0
0
22,313
0
20,551
0
0
(18,000)
0
12,371
0
0
10,248
0
12,757
0
(27,000)
0
0
0
53,482
0
0
0
13,611
0
0
(5,611)
0
0
0
(100,000)
0
(10,000)
0
0
0
44,046
0
18,417
0
21,541
0
(18,000)
0
(21,000)
0
Branch Manager
Branch Manager
Ming Lu Chang
Branch Manager
Ya Chang Huang
Branch Manager
Yi Chun Wan
Branch Manager
Chih Kang Feng
Branch Manager
Chia Lin Liu
shares held
Prior to 2015.02.28
Branch Manager
Chen Chieh Wu
Branch Manager
Pei Chen Chung
Branch Manager
Fu Hsiang Chen
Branch Manager
30,112
0
35,133
0
Te Yu Yuang
Branch Manager
52,835
0
46,302
0
0
50,887
0
Pei Yu Wu
Branch Manager
(26,000)
0
(15,000)
0
8,425
0
0
(10,000)
0
(5,000)
0
28,714
0
34,045
0
0
48,831
0
0
(36,000)
0
Chih Hung Chou
Branch Manager
Wen Hsiang Cheng
Branch Manager
Hung Ling Wang
Branch Manager
Ya Hui Chen
Branch Manager
5,875
0
17,408
0
Hung Chien Hsu
Senior Vice
President
55,731
0
0
Chih Hsiang Chang
Branch Manager
0
0
67
III
2014
Prior to 2015.02.28
Name
Title
He Lun Luan
Branch Manager
0
0
0
0
Ya Chin Lin
Branch Manager
5,653
0
16,001
0
Shu Chuang Chan
Branch Manager
0
0
Cheng Yuan Chang
Branch Manager
13,816
0
0
7,576
0
0
Tzu Hsin Yang
Branch Manager
0
0
shares held
shares pledged
shares held
shares pledged
Yun Liang Lu
Branch Manager
40,231
0
0
Yu Te Su
Branch Manager
25,206
0
10,213
0
Wen Po Wang
Branch Manager
52,616
0
23,013
0
Pei Chun Tsai
Branch Manager
0
0
0
0
Yung Feng Chen
Branch Manager
31,417
0
38,537
0
65,261
0
0
Ya Hua Wu
Branch Manager
(25,000)
0
0
0
Feng Chi Lin
Branch Manager
22,455
0
30,141
0
Shih Hsun Chen
Branch Manager
0
0
0
17,801
0
Yu Te Lin
Branch Manager
(71,000)
0
(18,000)
0
Chung Hsuan Li
Branch Manager
14,506
0
8,681
0
Chun Liang Lin
Branch Manager
11,570
0
0
0
24,511
0
Chiu Huang Chang
Branch Manager
0
0
0
0
13,153
0
0
0
0
27,625
0
21,562
0
(10,000)
0
0
0
0
0
2,730
0
Wen Hsiung Huang
Mei Ling Lin
Chi Feng Hung
68
Branch Manager
Branch Manager
Branch Manager
2014
Name
Title
Yung Hui Yang
Branch Manager
Tsai Ti Hung
Branch Manager
Po Cheng Hsu
Branch Manager
Chien Hsing Chen
Branch Manager
Cheng Jung Tsai
Branch Manager
shares held
Prior to 2015.02.28
shares pledged
shares held
shares pledged
22,000
0
34,744
0
(22,000)
0
0
0
0
0
22,000
0
0
0
(22,000)
0
0
0
0
0
0
0
0
0
(15,266)
0
0
0
Ching Chi Huang
Branch Manager
0
0
0
Yao Hsien Yang
Branch Manager
21,360
0
24,825
0
24,017
0
0
Shao Wen Hsieh
Branch Manager
(24,017)
0
0
0
45,101
0
21,278
0
0
0
24,470
0
0
0
(24,000)
0
50,202
0
0
(21,000)
0
(20,000)
0
32,340
0
0
(40,000)
0
0
0
0
63,835
0
Li Yun Huang
Branch Manager
Chung Chien Chiang
Branch Manager
Hsueh Ling Wu
Pin Shih Kao
Po Fu Chen
Branch Manager
Branch Manager
Senior Vice
President
(2) Equity Transferred: N/A
(3) Equity Pledged: N/A
69
III
9. Information on top 10 shareholders that are related parties, spouses or within second degree
of kinship:
8QLWVKDUH
Shares held by the person
Name (1)
Shares
Zhong Xi Co., Ltd.
5HSUHVHQWDWLYH
Alex Ying
Kwang Yang Motor
Co., Ltd.
5HSUHVHQWDWLYH
Sheng-Feng Ko
Hong Guang
Investment Co.,
Ltd.
Common Shares
Common Shares of
Private Placement
0
Zhi-Jian Lu
70
4.45
Xiong He Co., ltd
Farglory Life
Insurance Co., Ltd
0
123,103,015
Common shares
6,633
Private placement of
common shares
113,006,743
0
Common shares
7,711,716
Private placement
of common
VKDUHV
preferred shares
0
The names and relationships
of top 10 shareholders who are
related parties based on SFAS
No. 6 or relatives (spouses or
Remarks
second degree relatives)
Shares
Ratio
(2)
Shares
Ratio
(2)
Name
Relationship
0
0
0
0
N/A
N/A
N/A
0
0
0
0
N/A
N/A
N/A
0
Guang Xing
Industrial
Co., Ltd.
Hong
Guang
Investment
Co., Ltd.
$I¿OLDWHG
Institutional
Director
N/A
N/A
Director
0RQWHUVRQ
N/A
16.05
0.01
1,556,285
Shares held in the
name of others
0.00
5HSUHVHQWDWLYH
Shu-Yuan Wang
Ko
5HSUHVHQWDWLYH
Ming-Po Ya
Ratio
(2)
Shared held by the
spouse or minor
children
0.06
0.00
0
0
0
0
0
0
0
Hong
Guang
Investment
Co., Ltd.
Shu-Yuan
Wang Ko
0
0
0
0
Kwang Yang
Motor Co.,
Ltd.
$I¿OLDWHG
enterprise
N/A
Spouse
0.03
0
0
Sheng-Feng
Ko
0RQWHUVRQ
N/A
0
0
0
0
N/A
N/A
N/A
0
0
0
0
N/A
N/A
N/A
0
0
0
0
N/A
N/A
N/A
0
0
0
0
N/A
N/A
N/A
4.08
0
0.28
0.04
3.40
0
8QLWVKDUH
December 31, 2014
Shares held by the person
Name (1)
Shared held by the
spouse or minor
children
Shares held in the
name of others
The names and relationships
of top 10 shareholders who are
related parties based on SFAS
No. 6 or relatives (spouses or
Remarks
second degree relatives)
Shares
Ratio
(2)
Shares
Ratio
(2)
Shares
Ratio
(2)
Name
Relationship
Trustee Account of
Ta Chong Bank
52,655,502
0
0
0
0
N/A
N/A
N/A
CTBC Life
Insurance Co., Ltd.
Private placement
of common shares
514,705
preferred shares
47,058,823
0
0
0
0
N/A
N/A
N/A
Yi-Pao Ling
0.02
1.70
0
0
0
0
0
0
N/A
N/A
N/A
Lyon Securities
Asset Company,
a client of Lyon
Securities, held in
trust by Citigroup
43,604,873
1.57
0
0
0
0
N/A
N/A
N/A
Guang Xing
Industrial Co., Ltd.
40,707,271
1.47
0
0
0
0
Kwang Yang
Motor
Co., Ltd
$I¿OLDWHG
enterprise
N/A
5HSUHVHQWDWLYH
Jun-Bin Ko
0
0
0
0
0
0
N/A
N/A
N/A
Chien-Ping Chen
1.33
Spouse
0.00
0
0
N/A
N/A
N/A
Prepared based on the information from the register of shareholders on the latest book closure date (2014/07/28).
71
III
10. Shares of Reinvested Business held directly or indirectly by the Bank, the Bank's Director,
6XSHUYLVRUV 3UHVLGHQW 6HQLRU ([HFXWLYH 9LFH 3UHVLGHQWV 8QLW +HDGV DQG $I¿OLDWHG
Company Heads
8QLWVKDUH
December 31, 2014
Shares held by the Bank
Reinvested Business (Note)
S h a r e s h e l d b y D i r e c t o r,
Supervisors, President, Senior
Executive Vice Presidents, Unit
+HDG DQG $I¿OLDWHG &RPSDQ\
Heads
Total Shareholding
Shares
Ratio of
Shareholdings
Shares
Ratio of
Shareholdings
Shares
Ratio of
Shareholdings
80,000
0.404%
0
0
80,000
0.404%
3.017%
308,431
0.510%
2,138,246
3.527%
131,725,844
34.870%
1,787,728
0.473%
133,513,572
35.343%
7D&KRQJ,QWHUQDWLRQDO)LQDQFH
Investment (BVI) Ltd.
52,256,000
100%
0
0
52,256,000
100%
Taiwan Futures Exchange Co.,
Ltd.
1,485,437
0.512%
1,043,426
0.360%
2,528,863
0.872%
Hua-jing Venture Capital Corp.
21,200
4.240%
71
0.014%
21,271
4.254%
5,118,750
1.138%
0
0
5,118,750
1.138%
Ta Chong General Insurance
Agency Co., Ltd.
300,000
100%
0
0
300,000
100%
Ta Chong Life Insurance Agency
Co., Ltd.
300,000
100%
0
0
300,000
100%
Ta Chong Financial (Hong Kong)
Co., Ltd.
123,000,000
100%
0
0
123,000,000
100%
Yang Guang Asset Magt. Co., Ltd.
188,846
3.148%
0
0
188,846
3.148%
Taiwan Farm Industrial DunNan
Co., Ltd.
47,134
0.8%
326,758
5.706%
Taiwan Mobile Payment Co., Ltd.
600,000
0
0
600,000
Taipei Forex Inc.
Taiwan Farm Industrial Co., Ltd.
Financial Information Service Co.,
Ltd.
1RWH,QYHVWPHQWVPDGHLQFRPSOLDQFHZLWK$UWLFOHRIWKH%DQNLQJ$FWRIWKH5HSXEOLFRI&KLQD
72
IV
Capital Raised
IV
Capital Raised
1. Capital Source:
Month /
Year
Issuing
Price
(NTD)
Authorized Capital
Paid-in Capital
Remarks
Share
Amount
(NTD)
Share
Balance
(NTD)
Capital
Source
Others
Approval Date
and File No.
Mar. 1992
10
1,050,000,000
10,500,000,000
1,050,000,000
10,500,000,000
Initial
issuance
N/A
Mar. 1997
10
1,097,250,000
10,972,500,000
1,097,250,000
10,972,500,000
Capitalization
of Earnings
N/A
(97) Tai-Tsai Cheng
(1) No. 53033
Jul. 1998
10
1,159,553,620
11,595,536,200
1,159,553,620
11,595,536,200
Capitalization
of Earnings
N/A
(98) Tai-Tsai-Cheng
(1) No. 73297
Oct. 1999
10
1,206,278,071
12,062,780,710
1,206,278,071
12,062,780,710
Capitalization
of Earnings
N/A
(99) Tai-Tasi-Cheng
(1) No. 85308
Oct. 1999
10
1,356,278,071
13,562,780,710
(preferred)
150,000,000
(common)
1,206,278,071
13,562,780,710
Capital increase
N/A
(99) Tai-Tsai-Cheng
(1) No. 85308
16,192,548,790
(preferred)
412,976,808
(common)
1,206,278,071
16,192,548,790
Merger
N/A
(01) Tai-Tsai-Cheng
(1) No. 129664
26,192,548,790
(preferred)
405,169,006
(common)
1,214,085,873
16,192,548,790
Preferred stock
conversion Q1
N/A
(04) granted by ShangTzu No. 9301115930
26,192,548,790
(preferred)
312,045,790
(common)
1,309,329,996
16,213,757,860
Preferred
stock and CB
conversion Q2
N/A
(04) granted by ShangTzu No.09301150120
26,192,548,790
(preferred)
295,028,159
(common)
1,326,347,627
16,213,757,860
Preferred
stock and CB
conversion Q3
N/A
16,146,147,860
N/A
May. 2001
Jul. 2004
Aug. 2004
Dec. 2004
10
10
10
10
1,619,254,879
2,619,254,879
2,619,254,879
2,619,254,879
Mar. 2005
10
2,619,254,879
26,192,548,790
(preferred)
242,803,175
(common)
1,371,811,611
Mar. 2005
10
2,619,254,879
26,192,548,790
(preferred)
242,803,175
(common)
1,429,502,300
16,723,054,750
Preferred
stock and CB
conversion Q4
N/A
Apr. 2005
10
2,619,254,879
26,192,548,790
(preferred)
242,803,175
(common)
1,829,502,300
20,723,054,750
Capital increase
N/A
May. 2005
10
2,619,254,879
26,192,548,790
(preferred)
242,252,760
(common)
1,837,109,203
20,793,619,630
Preferred stock
and CB
conversion Q1
N/A
Sep. 2005
10
2,619,254,879
26,192,548,790
(preferred)
242,234,728
(common)
1,837,127,235
20,793,619,630
Preferred stock
conversion Q2
N/A
Oct. 2005
10
2,619,254,879
26,192,548,790
(preferred)
240,381,209
(common)
1,838,980,754
20,793,619,630
Preferred stock
conversion of Q3
N/A
(05) granted by ShangTzu No.
09401218380
Jun. 2006
10
2,619,254,879
26,192,548,790
(preferred)
240,380,423
(common)
1,838,981,540
20,793,619,630
Preferred stock
conversion of Q1
N/A
Jul. 2006
10
2,619,254,879
26,192,548,790
74
(common)
1,838,981,540
Delisting of Type
A preferred stock
Redemption of
18,389,815,400
Type B
preferred stock
N/A
Month /
Year
Issuing
Price
(NTD)
Authorized Capital
Paid-in Capital
Remarks
Share
Amount
(NTD)
Share
Balance
(NTD)
Capital
Source
Others
Approval Date
and File No.
Feb. 2007
10
2,619,254,879
26,192,548,790
(common)
1,890,107,102
18,901,071,020
CB conversion Q4
N/A
May. 2007
10
2,619,254,879
26,192,548,790
(common)
1,961,768,203
19,617,682,030
CB conversion Q1
N/A
Aug. 2007
10
2,619,254,879
26,192,548,790
(common)
2,070,522,270
20,705,222,700
CB conversion Q2
N/A
Dec. 2007
10
2,619,254,879
26,192,548,790
(common)
2,113,156,083
21,131,560,830
CB conversion Q3
N/A
29,366,854,960
Private placement
of common stock
and preferred
stock
N/A
Dec. 2007
10
5,000,000,000
50,000,000,000
(common)
2,701,391,378
(preferred)
235,294,118
Feb. 2008
10
5,000,000,000
50,000,000,000
(common)
2,728,331,196
(preferred)
235,294,118
29,636,253,140
CB conversion Q4
N/A
29,642,919,710
CB conversion Q1
N/A
May. 2008
10
5,000,000,000
50,000,000,000
(common)
2,728,997,853
(preferred)
235,294,118
Aug. 2008
10
5,000,000,000
50,000,000,000
(common)
2,729,227,359
(preferred)
235,294,118
29,645,214,770
CB conversion Q2
N/A
Nov. 2008
10
5,000,000,000
50,000,000,000
(common)
2,729,336,648
(preferred)
235,294,118
29,646,307,660
CB conversion Q3
N/A
23,717,046,140
Capital reduction
N/A
24,360,086,930
Capitalization of
Earnings
N/A
Sep. 2010
10
5,000,000,000
50,000,000,000
(common)
2,183,469,319
(private preferred)
188,235,295
Sep. 2012
10
5,000,000,000
50,000,000,000
(common)
2,247,773,398
(privatepreferred)
188,235,295
Aug. 2013
10
5,000,000,000
50,000,000,000
(common)
2,389,792,159
(private preferred)
188,235,295
25,780,274,540
Capitalization of
Earnings
N/A
(common)
Aug. 2014
10
5,000,000,000
50,000,000,000
2,580,573,912
27,688,092,070
(private preferred)
Capitalization of
Earnings
N/A
granted byShang-Tzu
No. 09901212490
2010/09/17
granted byShang-Tzu
No. 10101182490 on
2012/09/03
granted byShang-Tzu
No. 10201176450 on
2013/08/30
granted byShang-Tzu
No. 10301168620 on
2014/08/26
188,235,295
Authorized Capital
Type of Stock
Remark
Outstanding Shares
Treasury Stock
Unissued Shares
Total Shares
Common Stock
2,021,006,382
0
2,978,993,618
5,000,000,000
Private Equity of
Common Stock
559,567,530
0
0
559,567,530
Private
Placement
Convertible
Preferred stock
188,235,295
0
0
188,235,295
Private
Placement
Information related to the overall reporting system: None
75
IV
Capital Raised
2. Shareholder Structure:
February 28, 2015
Shareholder
Structure
Government
Units
Financial
Institutes
Other
Corporations
Individual
Foreign
Institutions and
individuals
Total
1
16
162
46,432
176
46,787
Shares Held
18,466,151
265,094,226
1,386,656,944
732,265,589
366,326,297
2,768,809,207
Shareholding
Ratio
0.67%
9.57%
50.08%
26.45%
13.23%
100%
Amount
Number of people
Note: This table was prepared based on the data in shareholder's register as of July, 28, 2014.
3. Distribution of Equities:
Common Stock Par Value: NT$10
February 28, 2015
Number of Shares
Number of Shareholders
Shares Held
Shareholding Ratio (%)
1~999
18,730
4,692,618
0.17
1,000 ~ 5,000
12,057
28,386,058
1.03
5001 ~ 10,000
4,724
33,247,036
1.20
10,001 ~ 15,000
4,669
53,494,267
1.93
15,001 ~ 20,000
1,128
19,776,097
0.71
20,001 ~ 30,000
1,604
38,214,868
1.38
30,001 ~ 50,000
1,307
50,405,893
1.82
50,001 ~ 100,000
1,187
80,198,018
2.90
100,001 ~ 200,000
672
88,556,254
3.20
200,001 ~ 400,000
329
90,484,675
3.27
400,001 ~ 600,000
100
49,023,352
1.77
600,001 ~ 800,000
64
44,256,491
1.60
800,001 ~ 1,000,000
32
28,218,360
1.02
Over 1,000,000
184
2,159,855,220
78
Total
46,787
2,768,809,207
100
Note: This table was prepared based on the data in shareholder's register as of July, 28, 2014.
Preferred Stock
76
Par Value: NT$10
February 28, 2015
Number of Shares
Number of Shareholders
Shares Held
1 ~ 999
1
295
0.00
1000 ~ 1,000,000,000
4
188,235,000
100
Total
5
188,235,295
100
4. Major Shareholders List:
Major Shareholder
Shares held
16.05
Zhong Xi Co., Ltd.
444,510,220
255,896,496
9.24
+RQJ*XDQJ,QYHVWPHQW&R/WG
123,103,015
4.45
Xiong He Co., Ltd.
113,013,376
4.08
)DU*ORU\/LIH,QVXUDQFH&R/WG
102,858,775
3.71
Trust Property Special Account entrusted to Ta Chong Bank – Employees' Stocks
52,655,502
1.90
Chinatrust Life Insurance Co., Ltd.
47,573,528
1.72
Lyon Securities Asset Company, a client of Lyon Securities, held in trust by Citigroup
43,604,873
1.57
*XDQJ;LQJ,QGXVWULDO&R/WG
40,707,271
1.47
Chien-Ping Chen
36,936,119
1.33
33,895,753
1.22
Mercuries Life Insurance Co., Ltd.
33,301,470
1.20
33,168,188
1.20
Citi Taiwan Dimensional Emerging Markets Value Fund
30,902,869
1.12
28,209,579
1.02
Note 1: listed are the shareholders with equity ratio over 1% or ranked among top ten in shareholding.
Note 2: This table was prepared based on the data in shareholder's register as of July, 28, 2014.
5. Market Price per Share, Net Value, Earnings, Dividends, and Other Relevant Information for
the Recent Two Years:
Unit: Thousand Shares / NT Dollar
Year
2014
2013
Highest
11.70
12.10
The highest after retroactive adjustment
(Note 8)
11.20
Lowest
9.26
9.17
The lowest after retroactive adjustment
(Note 8)
9.17
Item
Market Price per
Share (Note 1)
Net Value per
Share (Note 2)
Average
10.14
10.28
Before Distribution
12.81
12.72
After Distribution
Weighted Average Share
(thousand shares)
EPS (Note 3)
EPS
(Note 8)
11.75
Before Adjustment
2,537,968
2,318,588
After Adjustment
(Note 8)
2,499,330
Before Adjustment
1.04
1.15
After Adjustment
(Note 8)
1.06
Cash Dividends
Dividends per Share
Analysis of Return on
Investment
Stock
Dividends
From Retained Earnings
From Surplus Earnings
0
0
0.80
0.80
0
0
Accumulated Unpaid Dividends (Note 4)
0
0
Price-Earnings Ratio (Note 5)
9.75
8.94
Price-Dividend Ratio (Note 6)
0
0
Cash Dividends Yield Ratio (Note 7)
0
0
*In the event of issuance of stock dividends from earnings or capital reserve, the retroactive adjustment of market price and cash dividend based on the number of
shares shall be disclosed.
(1) The highest and lowest market price of each year and the average market price based on the trading value and volume of each year.
(2) According to the Shareholders' Meeting resolution regarding distribution of the following year, based on the number of shares issued by the end of the year.
(3) In the event of retroactive adjustment due to stock dividends, EPS before adjustment and EPS after adjustment shall be disclosed.
(4) If the issuance of equity securities provides that the current year's unissued dividends must roll over to the next year for distribution, the unissued dividends
up to the current year must be disclosed.
(5) Price-Earnings Ratio = Average closing price per share for the year / EPS.
(6) Price-Dividends Ratio = Average closing price per share of the year / cash dividend per share
(7) Cash dividend yield = Cash dividends per share / average closing price per share of the year.
7KHGLVWULEXWLRQRIHDUQLQJVVKDOOEHFRQ¿UPHGIROORZLQJWKH$QQXDO*HQHUDO0HHWLQJRIWKH6KDUHKROGHUV
UHVROXWLRQ
77
IV
Capital Raised
6. Dividend Policy and Implementation Status:
(1) Dividend Policy:
7KH %DQN
V GLYLGHQG SROLF\ LV EDVHG RQ WKH H[SDQVLRQ RI LWV HFRQRPLF VFDOH HQKDQFLQJ WKH RSHUDWLQJ HI¿FLHQF\
DQG PDLQWDLQLQJ VXI¿FLHQW ZRUNLQJ FDSLWDO DQG DQ DSSURSULDWH FDSLWDO DGHTXDF\ UDWLR$V WR WKH GLVWULEXWLRQ RI
shareholders' dividends, in principle the stock dividends shall not exceed 50% of the total surplus distribution
amount. However, the amount, type, and ratio of the actual surplus distribution shall be proposed by the Board
RI 'LUHFWRUV DFFRUGLQJ WR WKH DFWXDO SUR¿W DQG FDSLWDO WKH SURSRVDO VKDUH WKHQ EH SURFHVVHG DFFRUGLQJ WR WKH
Shareholders' resolution. The cash surplus distribution (referring to the total amount of shareholder's cash
dividends, director's and supervisor's remuneration, and employees' bonuses), the total amount shall not exceed
15% of the Bank's paid-in capital.
Legal reserve may be used to offset deficit. According to the revised clauses of Corporate Law announced on
January 4, 2012, if the Bank has no deficit and the legal reserve has exceeded 25% of the Bank’s paid-in capital,
the excess may be transferred to capital or distributed in cash; provided that the FSC's prior approval is required.
The stated appropriation of retained earnings or losses will be discussed by the Board of Directors and upon the
approval in the next annual general meeting of shareholders; to be expressed in the financial statements for that
year.
(2) Implementation Status:
The Bank's 2014 net income after tax was NT$2,635,095,000 with the retained earnings of NT$372,119,000 in
the beginning of period. Retained earnings reserved for the long-term equity investments and actuarial losses are
NT$948,000 and NT$42,366,000 respectively. The accumulated earnings distributable was NT$2,965,796,000 as
of the end of 2014.
The legal surplus reserved in accordance with the law was NT$790,529,000. The balance, in accordance with the
Bank's Articles of Incorporation, shall be distributed as dividends in the aggregate amount of NT$2,085,818,047 to
common stock and preferred stock shareholders (NT$0.8 per share). After distribution, the undistributed earnings
at the end of 2014 period was NT$90,220,000.
According to Article 35 of the Bank's Articles of Incorporation, the Bank shall distribute NT$130,000,000 in
dividend to Class C preferred shareholders, NT$22,500,000 in employees' bonus and NT$36,000,000 in board
remuneration, which all have been deducted from 2014 net income.
78
7. Impact of Stock Dividends (to be discussed at this AGM) on the Bank's Business Performance
and EPS:
Unit: In Thousands of New Taiwan Dollars
2015 (estimated)
Beginning Paid-In Capital Amount
25,805,739
Cash dividends per share (NTD)
This year's distribution
and dividends
Operation performance
changes
0.80
Distribution per share of capital increase from surplus (share)
0
2SHUDWLQJSUR¿W
N/A (see note)
,QFUHDVHGHFUHDVHUDWLRRIRSHUDWLQJSUR¿WFRPSDUHGZLWKRWKHUEDQNVRIDVW\HDU
N/A (see note)
1HWSUR¿WDIWHUWD[13$7
N/A (see note)
Increase (decrease) ratio of NPAT compared with other banks of last year
N/A (see note)
Earnings per share (EPS)
N/A (see note)
Increase (decrease) ratio of EPS compared with other banks of last year
N/A (see note)
Average annual return on investments (reciprocal of the average annual earnings ratio)
N/A (see note)
If the capitalization of retained earnings were
entirely distributed as cash dividends
Pro forma earnings per
share and PE ratio
0
Distribution per share of capital increase from earnings (share)
In the event of not increasing capital from capital
reserve
In the event of not conducting capital reserve,
and capitalization of retained earnings is instead
distributed as cash dividends.
Pro forma earnings per share
N/A (see note)
Pro forma average annual return
on investments
N/A (see note)
on investments
N/A (see note)
on investments
N/A (see note)
N/A (see note)
N/A (see note)
1RWH7KH%DQNKDVQRW\HWIRUPXODWHGDQGSXEOLVKHG¿QDQFLDOIRUHFDVW$FFRUGDQFHWR/HWWHU1RLVVXHGE\WKH0LQLVWU\RI)LQDQFH6HFXULWLHVDQG
Futures Commission on February 1, 2000, such information is not required to be disclosed.
8. Employees Bonus and Directors & Supervisors Remuneration:
(1) The amount or range of the employees' bonus and directors & supervisors' remuneration as provided in the
Bank's Articles of Incorporation:
The Bank shall contribute 30% of the remaining amount to the legal reserve until the balance reaches the share
capital. As required by business, the Bank may set aside a special surplus reserve or retain earnings, and 94% to
98% of the remainder shall be distributed as shareholder dividends, with 1% to 3% as directors and supervisors'
remuneration and 1% to 3% as employee bonuses.
(2) The basis for estimating the amount of employees' bonuses and directors' & supervisors' remuneration, and for
calculating the number of shares to be distributed as stock bonuses, and the accounting treatment for any
discrepancy between the actual distributed amount and the estimated amount:
Employees' bonuses and directors' & supervisors' remuneration are calculated according to the Bank's Articles of
,QFRUSRUDWLRQ )ROORZLQJ WKH HQG RI WKH ¿VFDO \HDU LQ WKH HYHQW RI VLJQL¿FDQW FKDQJHV WR WKH GLVWULEXWLRQ DPRXQW
as resolved by the Board of Directors, the originally provided annual cost shall be adjusted. At the time of the
Shareholders' Meeting, if the relevant amount has changed, adjustments shall be made based on changes in
DFFRXQWLQJHVWLPDWHVGXULQJWKH¿VFDO\HDURI6KDUHKROGHUV
0HHWLQJ
(3) Employees' bonus distribution proposed by the Board of Directors:
(1.) Distribution of employee cash bonuses, stock bonuses and directors' & supervisors' remuneration:
Employees' cash bonuses NT$22,200,000, employees' stock bonuses NT$0, and directors and supervisors'
remuneration NT$36,000,000.
Discrepancy with the recognized annual estimated amount: None
79
IV
Capital Raised
(23URSRVHGDPRXQWRIHPSOR\HHVWRFNERQXVWREHGLVWULEXWLRQDQGLWVUDWLRWRWKHSHULRG
VDIWHUWD[QHWSUR¿WDQG
the total amount of employee bonuses:
Employee stock bonuses were not distributed.
(3.) EPS after distributing employees' bonus and directors' & supervisors' remuneration:
The employees' cash bonus and directors' & supervisors' remuneration have already been deducted from the
2014 net income, the 2014 EPS is NT$1.04 per share.
(4) Actual distribution of employee bonuses and directors and supervisors' remuneration for the previous
¿VFDO\HDUNone.
9. The Bank's Repurchase of Its Own Stock:
December 31, 2014
Time of repurchase
Purpose of repurchase
Transfer to Employees
Transfer to Employees
2011.09.30 ~ 2011.11.24
2012.12.14 ~ 2012.12.25
NT$7~12
NT$8~11
40,000,000 common shares
39,937,000 common shares
NT$338,202,418
NT$410,660,220
Amount of shares repurchased
Record date: 2011.06.30, CAR:
11.57%
Record date: 2012.06.30, CAR: 11.53%
Capital adequacy ratio prior to repurchase
Record date: 2011.12.31, CAR:
10.79%
Record date: 2012.12.31, CAR: 12.13%
40,000,000 shares
9,181,458 shares
0 shares
30,755,542 shares
Total treasury stock holdings
0%
1.19%
Total treasury holdings over total shares issued (%)
0%
1.19%
2013/Jan: Transferred 17,067,625
shares
2014/Feb: Transferred 22,932,375
shares
2014/Feb transferred 9,181,458 shares to
employees
None
None
Period of repurchase
Price range of repurchase
Types and number of shares repurchased
Capital adequacy ratio after repurchase
Number of shares canceled and transferred
Implementation of transferring treasury stocks to
employees
Restriction measures to take if the stocks transfer is not
made within three years
80
10. Issuance of Financial Debentures:
March 27, 2015
Type of Financial
Debentures
The 2nd Non-cumulative
Subordinated Financial Debenture of
20016, without Maturity Date
The 3rd Subordinated Financial
Debenture of 2006
The 1st Subordinated Financial
Debenture of 2009
'DWHDQG¿OHQRRI
approval by the competent
authority
2006.02.16
FSC No. 09585004980
2006.02.16
FSC No.09585004980
2009.12.18
FSC No. 09800584420
Date of issuance
2006.11.27
2006.12.28
2010.01.05
Par value
NT$10,000,000
NT$10,000,000
NT$10,000,000
Issuance and
transaction place
R.O.C.
R.O.C
R.O.C.
Currency
NTD
NTD
NTD
Price of issuance
At par value
At par value
At par value
Total amount
2,110,000,000
1,500,000,000
1,380,000,000
Interest rate
The annual interest rate is 5.5% from
the issue date to the 10 years maturity
date. In case of no redemption of the
debenture by the Bank at the maturity
date, the annual interest rate will
increase to 6.5%.
The annual interest rate is 2.75% from
the issue date to the 5 years and 6
months maturity date. In case of no
redemption of the debenture by the
Bank at the maturity date, the annual
interest rate will increase to 2.95%.
Type A: 3.25%
Type B : CP+1.75%
Term
No maturity date
10 years / Maturity Date:2016.12.28
7 years / Maturity Date:2017.01.05
Settlement preference
Precede the shareholders of all kinds
of stocks of the Bank, but subordinate
to (1) the holders of second-category
subordinated financial debentures
of the Bank and (2) other general
creditors
Precede the shareholders of common
stock but subordinate to other
creditors of the bank
Precede the shareholders but
subordinate to the Bank's depositors
and other creditors
*XDUDQWRU
None
None
None
Trustee
None
None
None
Underwriter
None
None
None
Certifying Lawyer
None
None
None
Certifying CPA
None
None
None
Certifying Financial
Institution
None
None
None
Repayment
No date of maturity, subject to the
Bank’s redemption rights
Except where the Bank exercises its
redemption right, a single repayment
is made on maturity
Lump sum repayment of principal at
maturity
Un-repaid balance
2,110,000,000
1,500,000,000
1,380,000,000
Paid-in capital in the
previous year
(Thousand NTD)
20,793,620
20,793,620
27,293,366
Net value after settlement
for previous year
(Thousand NTD)
22,142,474
22,142,474
23,421,233
Repayment status
Not yet matured
Not yet matured
Not yet matured
Conditions for redemption
or repayment in advance
Nov. 27, 2016. The Bank may exercise
the early redemption right
The bank may exercise its redemption
ULJKWIURPWKHLVVXHGDWHWR¿YH\HDUV
and six months after the issue date.
Lump sum repayment of principal at
maturity
Conversion and
exchange conditions
None
None
None
81
IV
Capital Raised
Type of Financial
Debentures
Restriction terms
Plan for use of proceeds
The 2nd Non-cumulative
Subordinated Financial Debenture of
20016, without Maturity Date
6XERUGLQDWLRQ,IWKH%DQNKDGQRSUR¿W
for the first part of the year and did
not distribute dividends for common
shares (whether in cash or in kind), the
debenture interest shall not be paid,
and the right to claim the interest of the
said interest shall be eliminated and
will not be accumulated or deferred.
Fortify capital structure and increase
CAR
The 3rd Subordinated Financial
Debenture of 2006
The 1st Subordinated Financial
Debenture of 2009
Subordination
Subordination
The debenture can only be issued
to or transferred (after being sold)
to the following parties: banks,
underwriters, trust firms, insurance
companies, securities firms,
specific persons participating in the
Bank's capital reinforcement plan,
companies or funds whose total
assets exceed NT$50,000,000 as
confirmed by CPA auditors in the
latest financial audit , or those that
have entrusted assets exceeding
17ZLWKDWUXVW¿UP
Fortify capital structure and increase
CAR
)RUWLI\¿QDQFLDOVWUXFWXUHDQGH[SDQG
mid-term and long-term capital
Ratio of the declared
issuance amount plus
previous outstanding
balance to the net value
¿QDOL]HGLQWKH\HDUEHIRUH
issuance (%)
85.5%
92.3%
83.5%
Whether booked in eligible
capital and the relevant tier
Booked in tier 2 capital
Credit rating institute, date
of rating, and grade
-
-
Taiwan Ratings
2009.11.04: twBBB+
82
March 27, 2015
Type of Financial
Debentures
The 1st Subordinated
Financial Debenture of
2010
The 2nd Subordinated
2010
2011
2012
'DWHDQG¿OH1RRI
authority
2009.12.18
FSC No. 09800584420
2009.12.18
FSC No. 09800584420
2010.07.14
FSC No. 09900270930
2012.02.29
FSC No. 10100053150
Date of issuance
2010.02.26
2010.03.05
2011.03.09
2012.03.30
Par value
NT$10,000,000
NT$10,000,000
NT$10,000,000
NT$10,000,000
Issuance and
transaction place
R.O.C
R.O.C.
R.O.C.
R.O.C.
Currency
NTD
NTD
NTD
NTD
Price of issuance
At par value
At par value
At par value
At par value
Total amount
500,000,000
2,120,000,000
2,000,000,000
1,000,000,000
Interest rate
3.5%
3.75%
3.00%
2.15%
Term
7 years / Maturity Date:
2017.02.26
2017.03.05
2018.03.09
2019.03.30
Precede the common and
preferred shareholders of
the Bank but subordinate to
the Bank's depositors and
other creditors
the Bank, but subordinate
to all depositors and other
general creditors of the
Bank
Bank
Bank
*XDUDQWRU
None
None
None
None
Trustee
None
None
None
None
Underwriter
None
None
None
None
Certifying Lawyer
None
None
None
None
Certifying CPA
None
None
None
None
Institution
None
None
None
None
Repayment
Lump sum repayment of
repayment at maturity
principal at maturity
Lump sum principal
repayment of principal at
maturity
Un-repaid balance
500,000,000
2,120,000,000
2,000,000,000
1,000,000,000
previous year
(Thousand NTD)
27,293,366
27,293,366
21,834,693
21,834,693
for previous year
(Thousand NTD)
23,421,233
23,421,233
24,073,720
25,805,152
Repayment status
Not yet matured
Not yet matured
Not yet matured
Not yet matured
Conversion and
exchange conditions
None
None
None
None
83
IV
Capital Raised
Type of Financial
Debentures
Restriction terms
2010
Subordination
The debenture can only
be issued to or transferred
(after being sold) to the
following parties: banks,
underwriters, trust firms,
insurance companies,
securities firms, specific
persons participating
in the Bank's capital
reinforcement plan,
companies or funds
whose total assets
exceed NT$50,000,000 as
confirmed by CPA auditors
LQWKHODWHVW¿QDQFLDODXGLW
or a trust firm that has
been entrusted with assets
exceeding NT$50,000,000
in value
)RUWLI\¿QDQFLDOVWUXFWXUH
and expand mid-term and
long-term capital
2010
Subordination
(after being sold) to the
following parties: banks,
underwriters, trust firms,
insurance companies,
securities firms, specific
persons participating in the
Bank's capital reinforcement
plan, companies or funds
whose total assets exceed
17DVFRQ¿UPHG
by CPA auditors in the latest
financial audit, or a trust
firm that has been entrusted
with assets exceeding
NT$50,000,000 in value
2011
Subordination
(after being sold) to
the following parties:
banks, underwriters,
trust firms, insurance
companies, securities
firms, specific persons
participating in the Bank's
capital reinforcement
plan, companies or
funds whose total assets
exceed NT$50,000,000 as
FRQ¿UPHGE\&3$DXGLWRUV
LQWKHODWHVW¿QDQFLDODXGLW
or a trust firm that has
been entrusted with assets
exceeding NT$50,000,000
in value.
2012
Subordination
)RUWLI\¿QDQFLDOVWUXFWXUHDQG )RUWLI\¿QDQFLDOVWUXFWXUHDQG 5HSD\GXH¿QDQFLDO
debenture and enhance
IXO¿OOH[SDQGDQGORQJWHUP
expand mid-term and longoperational capital.
capital
term capital
issuance (%)
85.6%
94.6%
91.8%
74.1%
Taiwan Ratings
2010.02.26: twBBB+
Taiwan Ratings
2010.03.01 twBBB+
Taiwan Ratings
2011.03.02 twBBB+
Taiwan Ratings
2012.03.23 twBBB+
84
March 27, 2015
Type of Financial
Debentures
2012
The 3rd Subordinated
2012
2014
2014 Private Placement of
Euro Convertible Bond
'DWHDQG¿OH1RRI
authority
2012.02.29
FSC No. 10100053150
2012.02.29
FSC No. 10100053150
2014.1.3
FSC No. 10200364540
2014.6.4 Central Bank
No. 1030023274
2014.7.24 Central Bank
No. 10300199940
Date of issuance
2012.06.22
2012.12.27
2014.03.21
2014.08.07
Par value
NT$10,000,000
NT$ 10,000,000
NT$10,000,000
US$100,000
Issuance and
transaction place
R.O.C.
R.O.C
R.O.C.
Singapore
Currency
NTD
NTD
NTD
USD
Price of issuance
At par value
At par value
At par value
At par value
Total amount
1,000,000,000
1,500,000,000
3,500,000,000
US$350,000,000
Interest rate
2.05%
1.90%
2.05%
1.00%
Term
7 years / Maturity date:
2019.06.22
2019.12.27
2021.3.21
2021.08.07
Precede the shareholders
of common and preferred
shares of the Bank, but
subordinate to all depositors
and other general creditors
of the Bank
of common and preferred
shares of the Bank, but
subordinate to all depositors
and other general creditors
of the Bank
of common stocks of
the Bank in distribution
o f r e s i d u a l p r o p e r t y,
but subordinate to all
depositors and other
Bank. When competent
authority has appointed
a r e c e i v e r, o r d e r e d t o
liquidate or dissolve, the
preference is the same
as common shares of the
Bank.
Senior
*XDUDQWRU
None
None
None
None
Trustee
None
None
None
The Bank of
New York Mellon
Underwriter
None
None
None
None
Certifying Lawyer
None
None
None
None
Certifying CPA
None
None
None
Deloitte & Touche
Institution
None
None
None
None
Repayment
Unless already redeemed,
converted, or repurchased
for cancellation, this
bond will be subject to
redemption at par value at
maturity.
Un-repaid balance
1,000,000,000
1,500,000,000
3,500,000,000
US$350,000,000
previous year
(Thousand NTD)
21,834,693
21,834,693
23,897,922
23,897,922
for previous year
(Thousand NTD)
25,805,152
25,805,152
27,419,889
29,521,574
Repayment status
Not yet matured
Not yet matured
Not yet matured
Not yet matured
85
IV
Capital Raised
Type of Financial
Debentures
2012
The 3rd Subordinated
2012
2014
2014 Private Placement of
Euro Convertible Bond
Before maturity of this
bond, the Bank does not
have the right to redeem
the Bonds.
1.Converting target: The
new common shares
issued by the Company.
2.Conversion Period:
Unless already
redeemed, repurchased
and cancelled, converted
by the bondholder, or
during the book closure
period as regulated by
applicable laws or trust
agreement, bondholders
may request the Bank
to convert Bonds into
newly issued common
shares in accordance
with relevant laws and
regulations commencing
from the following day
of 40th day after its
issuance until 10 days
prior to the maturity,
3.Conversion Price:
NT$ 10.77 per share
(conversion price may
be adjusted at any time
in accordance with the
provisions governing
the conversion price
adjustment in the trust
agreement).
Conversion and
exchange conditions
None
None
None
Restriction terms
Subordination
Subordination
Subordination
None
Enhance operational capital
of foreign currency, expand
the capital source, reinforce
capital structure and expect
to raise the Bank’s capital
adequacy ratio.
Fortify capital structure and
expand the capital source.
Fortify capital structure and
expand the capital source.
Reinforce capital structure
and reduce the impact of
Basel III which applies to
eligible capital
issuance (%)
77.9%
79.9%
87.9%
91.9%
Not Booked in capital
Taiwan Ratings
2012.06.15 twBBB+
Taiwan Ratings
2012.12.19 tw A-
Taiwan Ratings
2014.3.13 twBBB+
None
86
11. Status of Preferred Shares Issuance- via private placement:
Issuing Date
Item
December 20, 2007
Par Value
10
Issue price
$17 per share
Numbers of shares
235,294,118 (before capital reduction)
188,235,295 (after capital reduction)
Total amount
2,352,941,180 (before capital reduction)
1,882,352,950 (after capital reduction)
Rights and
obligations
Allocation of dividends
or bonus
See the issue terms and conditions of Class C preferred shares
Distribution of surplus
V (rank above common shares)
Exercise of voting right
V
Others
See the issue terms and conditions of Class C preferred shares
Amount of redeemed or
converted shares
0
Amount of non-redeemed
and non-converted shares
NT$2,352,941,180 (before capital reduction)
NT$1,882,352,950 (after capital reduction)
Terms and conditions for
redemption or conversion
Conditions of conversion：
One year after the settlement date, stockholders may convert each Class C preferred share
into one common share. Unless agreed otherwise and to the extent permitted by law, the antidilution provisions for common shares apply the same way to Class C preferred shares, in
order to maintain Class C preferred shareholders’ equity.
Conditions of redemption：
Class C preferred shares are perpetual shares without maturity date. After 10 years from the
issuance date, the Bank could redeem the outstanding Rank C at the subscription price; if
there is no redemption after 10 years from the issuance date, dividend rate of Rank C will be
increased to the highest limit permitted under law. Class C preferred shareholders’ equity shall
be adjusted and preserved in accordance with Class C preferred shares’ original terms at the
time of issuance, to maintain their equity. Aggregate dividends and redemption price shall
remain the same as they were before capital reduction.
Outstanding
Preferred Shares
2012
2013
2014
2015
(as of February 28,
2015)
Other rights
Highest
N/A (See Note)
Lowest
N/A (See Note)
Average
N/A (See Note)
Highest
N/A (See Note)
Lowest
N/A (See Note)
Average
N/A (See Note)
Highest
N/A (See Note)
Lowest
N/A (See Note)
Average
N/A (See Note)
Highest
N/A (See Note)
Lowest
N/A (See Note)
Average
N/A (See Note)
As of the date of this annual
report is printed, the conversion
amount or subscription amount
*XLGDQFHRILVVXDQFH
conversion or subscription
None
See Item 27. Interests of the Appendix 1 (Financial Report) of this Annual Report for the major
terms and conditions
Impacts of issue terms and conditions to preferred
shares’ shareholders' equity; possible dilution of
equity and the impact on the rights of existing
shareholders.
Impacts of issue terms and conditions to preferred shares’ shareholders' equity: None.
Possible dilution of equity: Dilution degree or ratio is 6.80%.
The impact on the rights of existing shareholders: None.
Impact of preferred shares redemption to equity
capital and risk assets ratio
These are perpetual non-cumulative preferred shares. If fully redeemed, the Bank’s own capital
will reduce equally, and the bank's capital adequacy ratio will fall to 10.73% from the original
11.66% (as of December 2014).
(Note:Not publicly issued)
87
IV
Capital Raised
12. Issuance of Global Depositary Receipts (GDR): None.
13. Employee stock option certificates:
A.Employee stock option certificates
February 28, 2015
Category of employee stock option certificates
The First Employee Stock Option Certificates
Effective date
January 10, 2011
Date of issuance
January 26, 2011
Units issued
167,586,000 units (See Note)
The percentage of the number of shares issuable to the
total number of shares outstanding
7.066%
Duration of subscription
January 26, 2011 to January 25, 2021
Method of performance
Delivery of newly issued shares
The limited period and the rate limitation (%) of subscription
Proportion of cumulative subscription rights
2 years after issue 40%
Board staff may aim at employees in key positions and under the
condition that two years waiting period has passed, grant 20% of such
rights per year for five years period. Performance, in addition to the
continuous employment, may serve as partial condition, provided that
such subscription rights of the key employees may only be exercised after
the change of control.
Number of acquired shares executed
0
Amount of the subscription executed
0
Number of shares not yet subscribed
53,102,000 shares
price of subscription per share of those not yet subscribed
NT$10.6
The percentage of the number of shares not yet subscribed in the total
number of shares issued
1.92%
Impact on the shareholders’ equity
The subscription may only be exercised two years after the issue date of
the stock options and in accordance with the conditions of the subscription
right period. Dilution of the original shareholders' equity takes place
gradually year by year, so the dilution effect is still limited. Employee stock
RSWLRQFHUWL¿FDWHVLVVXHGVHUYHDVFRPPRQLQWHUHVWIRUWKH&RPSDQ\DQG
the shareholders, bringing positive effects to the shareholders' equity.
Note: The number of units of employee stock options authorized to be issued by the Bank was 200,000,000 units. As of January 26, 2011, 167,586,000 units were
issued, and the remaining 32,414,000 units are to be issued.
88
B. Names, acquisition and subscription details of managers with employee stock option certificates and top ten
employees in terms of subscription right
February 28, 2015
Exercised
Item
Manager
Number of
subscriptions
obtained
Title
（Note 1）
Name
Chairman
Chien Ping
Chen
16,758,000
President
Chien-Chou Hsu
(Note A)
16,758,000
Chief Auditor
Ming-Hsiu Tsai
5,449,000
Senior
Executive
Vice President
Ya-Ping Zhuang
5,449,000
Senior
Executive
Vice President
Tzu-Yu Hung
(Note A)
15,256,000
Senior
Executive
Vice President
Chin-Kuei Lai
(Note A)
16,346,000
Senior
Executive
Vice President
Chi-Chang Chen
(Note A)
9,808,000
Senior
Executive
Vice President
Hsiu-Hung Ho
(Note A)
9,808,000
Executive
Vice President
Min-Yao Chao
(Note A)
9,808,000
Senior
Executive
Vice President
Cheng-Kuang
Chiou
(Note A)
6,538,000
Senior
Executive
Vice President
Kevin Chen
1,635,000
Senior
Executive
Vice President
Kris Hung
300,000
Senior
Executive
Vice President
Ying-Che Huang
650,000
Executive
Vice President
Eileen Wei
Executive
Vice President
Terry Tsai
1,635,000
Executive
Vice President
Vincent Lai
700,000
Executive
Vice President
Edward Tyane
300,000
Executive
Vice President
Wei-Kang Hsu
(Note A)
2,179,000
Executive
Vice President
Po-Hsi Tan
(Note A)
2,179,000
Executive
Vice President
Fan-Jung Tseng
(Note A)
1,090,000
Executive
Vice President
Kuang-Sheng
Huang
(Note A)
5,449,000
Executive
Vice President
Li-Chuan Huang
(Note A)
4,359,000
Executive
Vice President
Tsui-Lan Lin
(Note A)
4,359,000
Ratio of
the number
of shares
subscribable
to the total
Number of
number
subscriptions
of shares
outstanding
7.066%
0
Unexercised
Subscription
price
Amount of
subscriptions
0
0
Ratio of number
of subscriptions
Number of Subscription
Amount of
in the total
subscriptions
price
subscriptions
number of
issued shares
0
53,102,000
shares
NT$ 10.6
NT$
562,881,200
Ratio of
number of
subscriptions
in the total
number of
issued shares
1.92%
2,179,000
89
IV
Capital Raised
February 28, 2015
Exercised
Item
Number of
subscriptions
obtained
Title
（Note 1）
Name
Executive
Vice President
Tracy Chu
1,090,000
Executive
Vice President
Johnson Chung
1,471,500
Executive
Vice President
Tina Wang
(Note A)
600,000
Executive
Vice President
7HUU\*XQJ
600,000
Executive
Vice President
Shi-Fang Hsu
450,000
Executive
Vice President
Eric Yang
600,000
Executive
Vice President
Hui-Chen Hsiao
600,000
Executive
Vice President
Hsiu-Mei Li
450,000
Executive
Vice President
Chia-Yu Li
400,000
Executive
Vice
Presidentt
Han-Ching
Chang
300,000
Executive
Vice President
Yung-Chih
Wang
650,000
Executive
Vice President
Erh-Ke Tung
500,000
Senior Vice
President
Yi-Chung Chen
(Note A)
2,179,000
Senior Vice
President
Wen-Hsin
Huang
1,035,500
Senior Vice
President
Pi-Wen Lo (See
(Note A)
650,000
Senior Vice
President
Pei-Hsin Huang
600,000
Senior Vice
President
Chih-Yi Chiu
(Note A)
600,000
Senior Vice
President
Ta-Kuan Wang
(Note A)
600,000
2I¿FH
Manager
Chiung-Yueh
Chang
400,000
Senior Vice
President
Chao-Kuei Tan
400,000
Senior Vice
President
Hsin-Ping Cho
(Note A)
400,000
Senior Vice
President
Sharon Feng
600,000
Senior Vice
President
Chu-Yung Lin
600,000
Senior Vice
President
Chi-Pi Yang
500,000
7.066%
Manager
90
Ratio of
the number
of shares
subscribable
to the total
Number of
number
subscriptions
of shares
outstanding
0
Unexercised
Subscription
price
Amount of
subscriptions
0
0
Ratio of number
of subscriptions
Amount of
in the total
subscriptions
price
subscriptions
number of
issued shares
0
53,102,000
shares
NT$ 10.6
NT$
562,881,200
Ratio of
number of
subscriptions
in the total
number of
issued shares
1.92%
February 28, 2015
Exercised
Item
Number of
subscriptions
obtained
Title
（Note 1）
Name
Senior Vice
President
Tsung-Jen
Wang
500,000
Senior Vice
President
Wan-Ping Wu
450,000
Senior Vice
President
Chiung-Fen
Huang
400,000
Senior Vice
President
Chung-Ping An
(Note A)
400,000
Senior Vice
President
Chia-Yi Lin
400,000
Senior Vice
President
Chih-Han Tsai
400,000
Senior Vice
President
Hui-Kuo Hu
400,000
Senior Vice
President
Wen-Chung Li
500,000
Senior Vice
President
Yi-Hsiung Chan
(Note A)
400,000
Senior Vice
President
Connie Cheng
400,000
Branch
Manager
Huang-Er Peng
(Note A)
600,000
Branch
Manager
Jen Huang
Chiang
(Note A)
500,000
Branch
Manager
Shu-Yu Chang
(Note A)
500,000
Branch
Manager
Yi–Chen Hsu
450,000
Branch
Manager
Pei-Ling Chung
400,000
Branch
Manager
Chin-Fen Chang
400,000
Branch
Manager
Hui–Ling Chung
(Note A)
400,000
Branch
Manager
Ping-Chun Chou
(Note A)
400,000
Branch
Manager
Yu-Chen Yeng
(Note A)
300,000
Branch
Manager
Nan Jung Wu
(Note A)
300,000
Branch
Manager
Wen-Chung
Chen
300,000
Branch
Manager
Chun-Ting
Cheng
500,000
Branch
Manager
Ya-Lan Chen
(Note A)
500,000
Branch
Manager
Chih-Hsin Li
400,000
Ratio of
the number
of shares
subscribable
to the total
Number of
number
subscriptions
of shares
outstanding
7.066%
Manager
0
Unexercised
Subscription
price
Amount of
subscriptions
0
0
Ratio of number
of subscriptions
Amount of
in the total
subscriptions
price
subscriptions
number of
issued shares
0
53,102,000
shares
NT$ 10.6
NT$
562,881,200
Ratio of
number of
subscriptions
in the total
number of
issued shares
1.92%
91
IV
Capital Raised
February 28, 2015
Exercised
Item
Number of
subscriptions
obtained
Title
（Note 1）
Name
Branch
Manager
Chien Hsu
(Note A)
400,000
Branch
Manager
Li-Ching Wang
400,000
Branch
Manager
Hsiu-Wei Ma
(Note A)
300,000
Branch
Manager
Chung-Yi Sung
(Note A)
300,000
Branch
Manager
Chun-Chieh Lu
300,000
Branch
Manager
Chao-Feng Hou
200,000
Ratio of
the number
of shares
subscribable
to the total
Number of
number
subscriptions
of shares
outstanding
7.066%
Manager
0
Unexercised
Subscription
price
Amount of
subscriptions
0
0
Ratio of number
of subscriptions
Amount of
in the total
subscriptions
price
subscriptions
number of
issued shares
0
53,102,000
shares
NT$ 10.6
NT$
562,881,200
Ratio of
number of
subscriptions
in the total
number of
issued shares
1.92%
Note A: The number of shares subscribed by leaving employees is 114,266,000 shares
C. Restricted employees shares shall specify the following:
1. Where the conditions of restricted employees' rights share have not yet been met, the relevant status and
impact on shareholders’ equity shall be disclosed in the annual report up to the date of publishing of the annual
report:None.
2. As of the date the annual report is published, names and the details of managers who acquired the restricted
employees’ shares and the employees ranked top ten in terms of such shares acquired:None.
14. Acquisitions of or Transfer to Other Financial Institutions:
During the last five years, there has been no acquisition of or transfer to other financial institutions.
15. Plans for Use of Proceeds:
(A) Content of the plan:
To enhance working capital, improve its own capital, and fortify financial structure.
(B) Implementation Status:
1. For details on the issuances of financial debentures and private placement of securities please, please refer
to "item 10, Financial Debentures" and "item 11, Status of Preferred Shares Issuance” of Section IV (Capital
Raised) of this annual report,
2. The issuance or private placement of securities that have not yet been completed, or have been completed
within the last three years with non-apparent benefits: None.
3. Please refer to "item 2, financial analysis" of Section VI (Financial Statements) of this annual report for the
recent five-year financial analysis and the information of changes in capital adequacy.
92
V
Operational Overview
V Operational Overview
1. Overview of this Bank's Operation
(1) Growth and changes in each individual business areas
A. Retail Banking businesses are divided into five major core business areas, consisting of Wealth Management,
Deposits, Mortgages, Personal Loans, and Credit Cards.
(1) Wealth Management
With the economic recovery in North America and Europe, the continuance of low global interest rates, and
the American QE policies, the global financial environment remains positive in 2014. The Bank's wealth
management business has upheld its principles including core strategies such as cultivation of clients in
different fields, diversification in retail channels, and optimization in product platform SOP. The growth rate
for overall wealth management business has reached double digit for year 2014. The remaining balance
from wealth management by the end of 2014 (I&I Balances) was NT$110.54 billion, showing an increase of
12% compared to the year 2013.
(2) Deposits
In December 2014, based on the statistics of Central Bank of the Republic of China, the Bank's total deposit
balance represented a market share of 1.07%, which is ranked 24th in the banking industry. The Bank's
aggregate deposit balance as of December 2014, including demand deposits and certificate deposits, was
NT$344.3 billion, representing an increase of NT$2.4 billion from its corresponding time frame in 2013.
The Bank's NTD deposits were increased by NT$5.1 billion, or by a percentage of 0.02% compared with
the previous year; foreign currency certificate deposits, however, were reduced by NT$2.7 billion or by a
percentage of 3.82%.
(3) Mortgages
As of the end of December 2014, the balance of the loans lent by Bank for acquisition and renovation of
houses was NT$95.292 billion, representing an increase of 0.8% from the same period in 2013, in the
amount of NT$94.537 billion. According to Banking Bureau's "Consumer Loans Business Items of Regular
Banks and Credit Unions" statistics, the Bank's market share has slightly reduced from 1.55% in 2013 to
1.52% in 2014.
(4) Personal Loans
The Bank's drawdown volume from personal loans business in 2014 showed an increase of 70.34%
compared to the year 2013. The loan balance at the end of December, 2014 was NT$11.597 billion,
representing an increase of NT$817 million or by a percentage of 7.58% from the balance of NT$10.78
billion in 2013.
(5) Credit Cards
The number of the Bank's credit cards issued in 2014 has increased by 92.79% compared to 2013. The
number of the Bank's cards in circulation, as of the end of December, 2014, was 589,472, which showed an
increase of 2.4% compared with the 575,415 cards in circulation during the same period in 2013. The valid
card ratio (number of valid cards / number of cards in circulation) was 50% as of the end of 2014, showing a
growth in both numbers of cards in circulation and valid cards when compared with the ratio of 46% for the
same period in 2013.
94
B. Wholesale Banking Group
Under Wholesale Banking Group (WBG), there are business units including Corporate Banking, Enterprise
Banking (SME), Financial Institutions (FI), and Hong Kong Branch (Taiwanese merchants, Hong Kong funded,
and PRC funded). The seven main core products provided by WBG are listed below:
1. Three Main Customer Bases
(1) Corporate Banking:
Due to the recovery of the US economy which led to the increase of domestic exports performances, the
need for corporate capital has revived. The Bank's corporate loan balance was NT$120.7 billion at the
end of 2014, representing a growth of 10.8% from 2013. In view of deflation in the euro zone and Japan,
the strong US Dollars and the fall of oil price has impacted the emerging markets. Combined that with the
gradual decrease in economic growth in China, and the increase of global uncertain factors in 2015, it is
anticipated that corporate capital need will be repressed. In 2015, besides maintaining good relationships
with target customers, the Bank will aggressively develop new SME clients in order to raise the percentage
of SME clients. It is estimated that the corporate loan balance will grow by 7.8% in 2015 from 2014.
(2) Enterprise Banking:
At the end of 2014 the enterprise loan balance was NT$11.3 billion, representing an increase of 22.8% from
2013. In 2015, to promote trading financing, the Bank will focus on promotion among clients in China, Hong
Kong and Taiwan, coupled with the Bank's sales of SME batch credit guarantee to expand customer and
business scale. It is estimated that the enterprise loan balance in 2015 will grow by 19.5% from 2014.
(3) Hong Kong Branch
Hong Kong Branch commenced operation from October 16, 2014. At the end of 2014 the loan balance
was NT$2.441 billion. It is estimated that the loan balance at the end of 2015 will reach NT$4.952 billion,
representing an increase of 102.9% from 2014.
2. Seven Core Products
(1) E-Commerce
In 2014, the Bank continued to improve and optimize the functions of personal internet banking, enterprise
internet banking, and cash flow management systems, and introduced mobile banking upon approval
from the competent authority, to cope with the trend of internetization and mobilization. Additionally, wiring
function through West Union was incorporated into internet banking, to accommodate customer base with
foreign transfer needs.
The Bank uses online banking system to provide corporate clients and payees with efficient deposit and
payment systems. In addition, the automation of securities and futures trading systems has greatly improved
efficiency and risk management. With the integration of cash management products and electronic financial
system, the Bank provides its customers real time and complete cash flow information, and deepens the
relationship between the Bank and its customers.
The number of cash management of corporate internet banking user accounts grew by 24% in 2014,
compared with 2013. It is estimated that in 2015 it will continue to grow to 30%. As for the personal internet
banking user accounts in 2014, the number has increased by 28% from 2013. It is estimated that in 2015 it
will continue to grow to 45%.
95
(2) Trade Services and Trade Financing
The Bank has always dedicated itself in providing clients with diversified trade services, from financing for
material procurement to export negotiation, export DA/DP financing and export deals/negotiation, forfeiting,
etc., to satisfy the demand of exporter and intermediate traders clients' needs for diversification, and to
reduce various types of risks and costs, and to allow for the flexibility in fund use. In 2014, the Bank's
customer import volume reached US$216 million, and the export amount even reached US$1,280 million
representing a growth rate of 38% from 2013.
For 2015, the focus of the overall market remains on meeting the trading needs of SME and RMB funded
enterprises. Accordingly, the Hong Kong Branch was established, which would provide cross border facility
and services to Taiwanese merchants in China and RMB funded enterprises. However, due to the forecast
of a strong U.S. Dollar and the RMB easing policy within the realm of China, the growth in the Bank's
exporting business segment is expected to be limited.
(3) A/R Factoring
AA/R factoring caters to clients by providing capital and managing accounts, and to protect buyers from
risks. In 2014, the volume of the Bank's factoring business was NT$55 billion, which has continued to grow.
The factoring computer management system developed by the Bank was completed and placed online
which has enhanced business statistics function, accounts tracking, efficiency and integration of processing
of the Bank's operation. The system can provide customers with real-time data query service, and improve
customer service quality. In 2015, while continue to enhance system functions, the Bank will provide more
diversified A/R products to promote continued growth in the factoring business.
(4) Treasury Products
There are two main customer segments in the area of treasury products and services – corporations and
financial institutions (FI). The Bank's products cover currency products, interest products and investment
products, etc. In 2014 treasury revenue from the Bank's Wholesale Banking Group was NT$1.8 billion,
showing a growth of 22.7% from 2013. In 2015, apart from continued to enlarge ranges of treasury products
and develop new clients, the Bank shall provide more diversified treasury products of financial hedging,
finance and investment banking operations and also more customized products for clients to satisfying their
needs.
(5) Syndicated Loans
The Bank's syndicated loan business aims to help clients improve their financial structure and support their
long-term capital utilization plans. With the Bank's active involvement in the syndicated loan industry since
2005, it has established great reputation and market position. However, due to the competitive price in the
Taiwanese syndicated loan market, the Bank's participation in this area has dropped due to profitability
considerations and part of the operation was redirected toward the international syndicated loan market.
In 2014, the Bank sponsored 11 syndication loan cases, which is the same number of cases as in 2013. In
2014, the total syndication loan volume was NT$2.15 billion, which shows a reduction of 33% from 2013.
However the fee revenue in 2014 is an increase of 27% from 2013. The Bank will maintain good long term
relationships with its clients and other banks so as to establish a good foundation in this niche business.
96
(6) WBG Finance Business
There are three main segments in the WBG Finance Business: SI, Consulting, and Corporate Trust.
The main content of SI is to assist corporate banking clients in designing structure and financing program,
to provide customized and tailor-made products. In financial consulting segment, the Bank gives advice
in acquisitions, fundraising, evaluation, and financial improvements. In 2014, SI and consulting service
revenue was NT$6.51million, mostly from the revenue of financing advices, fortification of financial structure
and other services fees.
Corporate trust business mostly focuses on providing trust and custodian products that address the Bank's
corporate banking clients' needs. In 2014, the fee revenue from corporate trust service was NT$39.67
million, which was a growth of 107% comparing to the revenue of NT$19.151 million in 2013. The growth
mostly due to the substantial increase in real estate trust business. The Bank mainly offers real estate trust,
money trust, and custodian banking services of securities invested by foreign entities, and TDR depository
banking services. Among the services, real estate trust ranked top in terms of revenue generation,
constituting 86% of the aggregate corporate trust business revenue, and the purpose money trust (includes
consideration trust, advance payment trust, and living trust) constitutes 6% of the total revenue.
In 2015, corporate trust business will continued to develop toward customized products tailored to the
clients' needs in order to differentiate the Bank from its competitors and to generate higher profits.
(7) Foreign Labors Loans
In consideration of the needs of the manufacturing and household care industries, the government allowed
blue-collar foreign workers to work in Taiwan. Before coming to Taiwan, the foreign labors need to apply
for financing at financial institutions due to their incurrence of expenses. In consideration of the high
demand in this market, the Bank has commenced a business development department in September,
2012, to assist enterprises clients in handling three special project financing businesses in foreign labor
loans, foreign labor agent guarantees, and motorcycle financing. In 2014, the loan balance of the sector
was NT$324.246 million, showing a growth of 265.18% compared with 2013. The earning was NT$11.744
million, representing a growth of 78.94% from 2013.
97
C. Financial Market Division
Notional Volume of Ta Chong Bank's Financial Derivatives Transaction
Unit: USD Thousand
2014
2013
Growth Rate
Interest Rate Derivatives
6,166,279
1,841,517
234%
Foreign Exchange Derivatives
69,191,108
76,349,402
-9%
Equity Derivatives
4,775
4,787
-0.3%
Credit Derivatives
0
0
0%
Product Derivatives
7,508
30,246
-75%
2014 Transaction Notional Volume of Financial Products:
1. In positive trend
The transaction notional volume of contract related to interest rate grew by 234%.
2. In negative trend
Notional volume of contracts related to equity, credit and product derivatives was in negative trend.
D. The proportion of net incomes from the main businesses:
Net income proportion
2014
2013
Retail Banking Business
56%
59%
Wholesale Banking Business
32%
31%
Financial Market Business
12%
10%
Total
100%
100%
2014/12/31
2013/12/31
Demand Deposit Ratio
32.85%
34.79%
Loan/Deposit Ratio
82.63%
75.97%
NPL Ratio
0.08%
0.11%
E. Key Performance Indicator, KPI:
98
Coverage Ratio
2099%
1416%
CAR Ratio
11.62%
11.52%
ROA (after tax)
0.58%
0.60%
ROE (after tax)
8.48%
9.48%
(2) 2015 Business Plans:
1. Retail Banking Businesses
(1) Wealth Management
In 2014, the Bank's wealth management business placed emphasis on cultivating and providing services to
VIPs through developing and cultivating deeper relationship with elite customers, strengthening discipline
and systematically managing the team, , developing the diversity of product lines, continuing professional
training of sales staff, strengthening sales process and executing regulatory compliance and risk control
mechanism. The Bank focused on customer service and monitored the soundness of clients' investment
portfolios, therefore the wealth management performance continues to grow.
Looking into the future of 2015, the Bank will place emphasis on enhancing the breadth and depth of the
client's investment portfolio, and further strengthen customers' willingness to deal and sense of trust, and
the Bank will provide abundant, convenient and free personal financial services in order to meet the goal
of providing customers with diversified finance management service. In addition, the Bank will combine
product resources from partners through strategic alliance to achieve synergy and provide better investment
strategy and service information with diversity and the international outlook.
(2) Deposits
The Bank's deposits business in a matured and competitive financial market, where its main target will be to
raise the Bank's volume of demand deposit and to reduce the costs of proceeds to improve the profitability
of the Bank.
Therefore, the Bank will utilize the high flow period and dry period of the capitals existing in the market to
launches short term demand deposit programs in NT dollars, replacing high cost with flexibility in deposit
and withdrawal, to attract steady and low cost capital into the Bank.
With respect to foreign currencies, coupled with the Bank's house view on foreign currency market, the
Bank will launch appropriate foreign currency deposit programs to absorb new funds in foreign currencies.
Along with CASA+ Master demand deposit and Foreign Currency Excellent Rates Account, the Bank aims
to increase non-corporate clients' demand deposit ratio.
With respect to developing new customers, the Bank will continue to promote tools such as deposit
programs and account, and passbook DIY to attract new clients to open accounts.
For those micro-enterprises, the Bank will integrate cash management banking, pay-roll, settlement and
other cash flow tools, and to utilize micro-enterprise corporate NT dollars demand deposit accounts to
increase the cash flow assets and product adhesion.
99
(3) Mortgages
In the upcoming year, the goal of mortgage business will be to continue development at a steady rate. The
Bank will focus on a higher interest rate products in order to increase the optimal balance of price and
incomes, continue following the real estate trends, strengthen the implementation of KYC, reduce the risk of
market reversal, and decrease the amount of new purchasing cases in order to comply with the requirement
governing the residential proportion control stipulated under Article 72-2 of Banking Law. In addition to
housing mortgage loans, the Bank will add the equity loans, second mortgage and other guaranteed
products in order to meet the needs of different customers.
(4) Personal Loans
In the upcoming year, the Bank will continue to focus on the business of personal loans under the
consideration of credit quality, quantity and revenue. In addition to enhance the value of the original
direct marketing channel, the Bank will strengthen the branches and intangible channels through deeper
development with customers and cross-marketing in order to meet customer needs and improve the Bank's
earnings. With respect to products and processes, in addition to amortization of product, the Bank will
provide product with credit facilities to increase the frequency of customer contacts. The Bank will continue
to optimize internal processes to facilitate the product promotion and enhance the competitiveness of the
Bank. Regarding asset quality, the Bank will continue the implementation of KYC procedures coupled with
the use of the score card to efficiently control both the asset quality and profitability.
(5) Credit Cards
Regarding the development of credit cards business, the Bank will aggressively develop new clients and
seek more cross-marketing opportunities. Furthermore, based on the position of products and attributes
of the customers, the Bank will continue to promote a variety of consumer promotional activities, so as to
enhance the rate of credit card utilization and increase the Bank's billing amount and the revolving credit
balance.
The focus of business development is managing mass customers with core cards, analyzing the card
clients' consumer purchase behaviors and adjusting and strengthening the rights and discounts of core
cards accordingly in order to achieve the activation of the old clients, to attract new clients to enhance the
overall rate of use and the amount of consumption.
For VIP customers on the branch ends, the Bank launched dual-currency credit card linked to foreign
currency accounts, so as to increase the flexibility and convenience of customer's configuration of foreign
currency assets to enhance the international image of the Bank's credit card. For those high consumption
potential clients, world card will be the main product targeted for promotions, and the Bank also plans to
launch various promotion events to increase satisfaction and loyalty of client base with high consumption. In
response to the digitalization trend of finance, the Bank develops and promotes mobile credit card, creating
a digital payment environment to improve usage convenience and safety for customers.
100
2. Corporate Banking Businesses
The Bank's Corporate Financial Markets Group will continue to expand corporate banking asset scale and
strengthen its asset structure. The Bank will continue to develop loans for high-quality domestic clients,
participate in high-quality overseas syndicated loans' projects for customers from China, Hong Kong and
Southeast Asia. The Bank will enlarge the scale of assets by actively expanding overseas customers through
the Hong Kong Branch, and increase the ROA of credit of corporate banking businesses and profits to the
Bank through the ways such as raising up the proportion of SME loans, actively developing new customers
of financial commodities trading and trade finance, replacing existing customers having lower earning rate,
and promoting derivative products, cash management business, trade financing service, syndication loans,
A/R factoring and foreign labor loans. In addition, the Bank will set up a dedicated team to enhance the
management and control of corporate banking businesses' China risk exposure and to be responsible for the
collection and expansion of overseas market information.
(1) Corporate Banking Clients:
The Bank will continue to expand its cash management, trade financing, treasury sales, factoring,
syndicated loan and corporate finance management businesses, while at the same time aggressively
develop medium and small-sized businesses clients, new customers of financial commodities trading and
replace existing customers having lower earning rate in order to increase the proportion of medium and
small-sized businesses clients and to improve the whole profitability of corporate banking business. With
respect to deposit, in addition to the enhancing the absorption of deposits, increase the percentage of
demand deposits and reducing the fund cost of the Bank, the Bank will disperse the source of deposits,
actively develop new small business customers with less than NT$40 million in total deposit, as the Bank's
early response to the FSC's requirement that the liquidity coverage ratio must reach 100%. In the aspect of
risk management, the Bank will examine the credit rating of the clients quarterly, to decrease bad debt rate.
(2) Enterprise Banking Clients:
The Bank's main focuses on business development in this area is on the small and medium-sized enterprise
with revenue of at least NT$500M. The Bank will also increase the ROA of credit, while at the same time
increase trading finance, the amount of trade and deposits of receivables. In order to consummate its
growth rate goal, in additional to expanding RM staff and improving RM productivity, the cross-sale revenue
shall increase. With regards to the dispersing transaction of the sales of financial products, the Bank will
disperse the risk of single accounts through expansion of customer base. The Bank will transfer clients
who are qualified to receive financing credit guarantee for credit guarantee batch and actively increase the
compensatory batch of credit guarantee.
The Bank will reduce credit risk through due diligence by closely following market conditions, industry
trends, clients' business status and the terms and conditions provided by other financial institutions.
101
(3) Financial Institution Clients:
In 2015, the Bank's goal is to manage deposit concentration and the relevant costs. The Bank will continue
to develop relevant domestic and overseas financial customers to accelerate the expansion of client base,
and to expand assets and derivatives businesses. The Bank will also continue to improve the ratio of the
current demand deposit through cash management and the securities settlement closing business and to
increase revenue from handling fees. Recently there is a trend that credit risks are on the rise in mainland
China, and accordingly the Bank will adjust and monitor the facility amount of Chinese financial institutions.
(4) Clients of Hong Kong Branch:
Hong Kong Branch commenced operation on October 16, 2014, and its aim is to solicit SMEs business
with the Taiwanese background as its primary customers, and followed by medium and large Taiwanese
companies. The Hong Kong Branch also makes efforts to establish relationships with high-quality Hong
Kong or Chinese companies, to cope with the current status quo of Hong Kong market and to expand
deposits and operating basis.
3. The Financial Markets Business
(1) To ensure the smooth operation of the funds management platform and asset and debt management.
(2) To maintain a healthy and effective risk management platform and to support the growth of trade business
and financial product business, and to continue to optimize depth and breadth the products.
(3) To continue to cultivate customer relationships, provide customers more diverse selection of products and
customized products, and strive to be the top bank for customers with specialized hedging or investment
needs for.
102
(3) Market Analysis
1. Review and Development of 2014
In 2014, affected by comeback of the United States economy and major electronic products, the local
investment market and the export market have revived. Comparing to 2013, domestic consumption has
improved due to job markets improvements, stock market recovery and the growth in tourism. Following the
deregulation of restrictions to OBU business and Bank's foreign investment, the Bank led a significant growth
in overseas earnings which resulted in the obvious growth of the overall profitability. In 2014, the overall bank
profits hit a new high in recent years. Pre-tax income amounted to NT$320.1 billion, an annual growth rate of
about 24.2%. The ROA and ROE were 0.79% and 11.65% respectively. The profit improvement mainly came
from revenues generated by overseas branches and OBU.
2. Supply, Demand, and Growth of the Market
(1) Supply:
In 2014 there was an upturn in the economy. Due to the high mobility in the market and the abundance of
hot money, there was adequate supply of capital. In addition, the excessive number of domestic banks and
the high homogeneity have resulted in intense price competition, which has adversely affected the financial
institutions. This trend is expected to continue in 2015.
(2) Demand:
IIn 2014, there was an upturn in domestic economy, and the annual growth rate of 3.74 % of the domestic
economy was better than the rate of 2.59% originally expected by Accounting and Statistics of Executive
Yuan. There was a slight improvement in corporate needs for capital following by the economic recovery.
The total loan amount of domestic banks amounted to NT$24.9 trillion at the end of December in 2014,
constituting an annual growth rate of about 11.2%.
Looking into 2015, the global and domestic economy is expected to recover gradually. The Directorate
General of Budget, Accounting and Statistics of Executive Yuan forecasted this year's economic growth
rate to be about 3.78%. The global economy is full of uncertainties; therefore domestic corporate need for
funds is expected to remain conservative. However, with the significant deregulation of the RMB and OBU
business restrictions, the domestic banks are able to address Taiwanese merchants' needs for capital and
risk hedging through overseas branches and OBU, and it is expected to bring some growth opportunities.
(3) Growth:
In 2015, financial growth remained conservative, due to the slow global economic recovery and an increase
in the elements of uncertainties. The opportunity for growth comes from the steady growth in overseas
business segment.
The Bank's asset size is currently less than NT$500 billion. In order to achieve economical benefits, in 2015
the Bank's strategies will be to maintain steady growth in each business segment. The major opportunity
of domestic growth comes from developing SME customers in order to expand client base and enhance
profitability. The Bank will also continue to develop diversified business to increase profits.
In addition to relying on OBU for overseas business growth, the Bank will explore enterprise customers
such as Taiwanese merchants in China, and customers with Hong Kong funds and Chinese funds, through
its newly-opened branch in Hong Kong, to enlarge the asset scale of the Bank.
103
3. Ta Chong Bank's Competitive Advantages
(1) The Bank's staff provides excellent customer services that are highly-applauded by the clients.
(2) The Bank's marketing/sales team is composed of experienced and professional members who are able to
provide high added-value service for customers.
(3) The Bank's product lines are well developed and the managers of the product line are equipped with
professional knowledge to provide customized products.
(4) The technical advantage of new core system can improve the efficiency of process, enhance core
competence and heighten satisfaction experienced by the customers.
(5) Successful image of the Bank and brand marketing strategies are useful in business development.
4. Favorable Factors for Development Prospects
(1) Complete product lines.
(2) The upgrades in the information system and electronically financial system can improve efficiency of
process, enhance the core competence and heighten satisfaction experienced by the customers.
(3) Diversified abilities in developing new business to explore new niche markets.
(4) Seasoned financial management team with experience and flexible business strategies.
(5) Centralized operations to reduce costs and improve efficiency.
(6) Successful image of the Bank and brand marketing strategies is good for business development.
(7) The good constitution quality and a good financial structure.
(8) The establishment of Hong Kong Branch is beneficial for overseas business expansion.
5. Disadvantages of development
(1) Price competition in the industry
(2) High cost of capital
(3) Lower net value and assets, leading to the disadvantage for the business development.
(4) Scarce network of branches and ATMs compared to other banks.
(5) Hong Kong Branch will continue to encounter new financial regulatory measures launched by the financial
supervisory authorities.
6. Countermeasures
(1) To select clients appropriate for the Bank's strategy and implement reasonable loan pricing.
(2) To adjust the deposit structure, reduce the proportion of institutional investors' deposit and reduce bank
deposits costs of the Bank.
(3) Market segmentation and activation pathways for different customer layers to focus marketing.
(4) To strengthen cross-selling efforts to improve the ratio of non-lending revenue, and to strive to become the
main bank for customers.
(5) The continuous development of differentiated new products to meet customer needs and to provide a more
complete service for the enterprises through improvement of the system and the integration of resources.
(6) To actively develop overseas customers, and make efforts in overseas markets to meet financing and
hedging needs through the Hong Kong Branch.
(7) Meet the requirements of regulatory measures to adjust the strategic direction of the Hong Kong Branch.
104
(4) Research of financial product and survey of business development
1. The scale and gains and losses of the major financial products and additional business departments
established in the two most recent years
(1) Retail Banking Business
Major Financial Products
Scale and Gain/Loss
A
Deposit Business
At the end of 2014, the amount of deposits is NT $352.88 billion (including Postal Savings and
Remittance Bureau deposit), a slight increase of 0.14% compared with 2013.
B
I&I Balances
At the end of 2014, Wealth Management (I & I Balances) amounted to NT$110.54 billion, an increase of about 12% compared with 2013.
C
Mortgage Loans
At the end of 2014, there was a mortgage balance of NT $ 95.292 billion, an increase of about
0.8% compared with 2013.
D
Personal Loans
At the end of 2014, individual credit loan balance was at NT$1.16 billion, an increase of about
7.58% from 2013.
E
Credit Cards
At the end of 2014, the number of outstanding credit cards in circulation was 589,472. The number of valid cards has increased by about 10% compared with 2013.
(2) Corporate Banking Business
Major Financial Products
Scale and Gain/Loss
A
Corporate Finance Lending
At the end of 2014, loan balance was of NT$126.7 billion, representing an increase of about
10.8% compared with 2013.
B
Commercial Finance Lending
At the end of 2014, amount of loan balance was NT$11.3 billion, an increase of 22.8% compared
with 2013.
C
Electronic Banking Services
In 2014, the number of users using corporate online banking has increased by 24% from 2013.
In 2014, the number of users using personal online banking has increased by 28% from 2013.
Trading volume also showed a trend of high growth. In 2014, corporate online cash management
transactions grew at a rate of 90%, while the personal online banking transaction grew at a rate
of 40% compared with 2013.
D
Trade Services and Trade
Financing
In 2014, the Bank's commitments for imports was NT$6.84 billion, while the one for export was
NT$40.531 billion. Aggregate volume for import and export showed a growth of 20% compared
with 2013.
E
Factoring
For the year of 2014, Bank's volume in factoring was NT$55 billion, representing an annual
growth of 12% compared with 2013.
F
Sales in Financial Products
$W WKHHQG RI WRWDO VDOHV RI ¿QDQFLDO SURGXFWV ZDV 17ELOOLRQ \XDQ UHSUHVHQWLQJD
growth of 22.7 percent compared to 2013.
G
Syndicated Loan Business
In 2014, the Bank hosted 11 syndicated loan cases, for the amount of NT$6.758 billion.
H
Corporate Banking Wealth
Management
)RUWKH\HDUDQQXDO¿QDQFLDOVHUYLFHIHHUHYHQXHZDV17PLOOLRQ6HUYLFHIHHUHYHQXHIRUVWUXFWXUHGFRPPRGLWLHVDQG¿QDQFLDODGYLVRU\VHUYLFHVZDV17PLOOLRQDFFRXQWLQJ
for about 13%; revenue from corporate trust and custodian fee was NT$39.670 million, accounting for about 87%.
105
(3) Financial Market Related Business
A. The financial markets department is in charge of the Bank's capital, to ensure that capital allocation
platform and asset-debt management will continue to operate in a steady manner. The Bank's average
flow rate of preparation in the recent two years is 30.59% in 2013, and 26.49% in 2014.
B. The main business plan of financial markets department is to expand the base of SME customers: in the
recent two years, the development in SME customers is outstanding.
C. The Bank actively expanded structured investment commodity business (DCI/SI/ELI). Trading volume
was NT$30,945 million in 2013, and NT$14,469 million in 2014 respectively. Assets Under Management
(AUM) was NT$2.401 billion by the end of 2013 and NT$6.94 billion by the end of 2014.
2. The newly established the business departments:
The Bank aims to actively explore enterprise customers including Taiwanese merchants in mainland China,
corporate clients with Hong Kong sourced funds, and Chinese sourced funds, in order to expand the Bank's
overseas sales in deposits, lending and financial products. The Hong Kong Branch commenced operation on
October 16, 2014, and at the end of 2014 the loan balance was approximately NT $ 2.4 billion.
3. The research and development expenditures and achievements for the last two years, and the future
developing plans
(1) Research and development expenditure:
106
Year
2014
2013
Amount
20,458
34,729
(2) Research and development achievements
■
From the aspect of risk management
A. Establish corporate banking credit system (corporate banking e-LOAN), database of corporate banking's
financial statements, CPA's examine system, and improve the operating efficiency of corporate
financing.
B. Establish grading card model for personal financing cases, in order to control risk and enhance
efficiency of credit analysis.
C. Establish a grading card model for personal credit card cases, to control risk and enhance efficiency of
credit analysis
■
From the Aspect of Information Technology
A. The Bank received ISO27001-2005 information security management system certification in 2013, and
will proceed to obtain the new ISO27001-2013 certification in 2015.
B. Establish a single platform for offshore funds subscriptions. With electronic media exchange platform for
the ordering process, the procedures were simplified to reduce labor costs.
C. OBU Fund + Hau-Tou-Jia project. In consideration of the master feeder fund concept, the Bank transfers
parts of master fund to its sub fund upon the fulfillment of the conditions of the conversion set by the
customers, in order to increase the Bank's service fee revenue.
D. Payment action through Chunghwa Telecom's QR Code.
E. Integration of account setup procedures, application for integration of online banking functions and the
optimization of voice system.
F. Establishment of the financial transactions comparison systems, financial transaction confirmations and
the reminder system.
G. Development of PFE_CCR counterparty credit risk calculation, correction of KGR calculation of PSR
deficiency and automation, and correction of KGR's calculation of SR deficiency and automation.
H. Reports on interest rate risk in banking book, to check on overexposure interest rate risk in banking
books, and the automation of report output with banking book interest risk management reports.
I.
Reports on liquidity risk evaluation, automation to produce LGR, and automated calculation of Liquidity
Indicator.
J. Development in foreign labor loans acquisition system in correspondence to Bank's newly added
business in acquiring foreign labor loans. A management platform was established to allow for complete
analysis, drawdowns, repayments, collections and operation reports, etc.
K. Mobile Banking Project, which provides credit card and banking customers access to bank account
information and personal information on smart phones, allowing a diversity of services to be provided to
customers.
L. The new official website project, aiming at customer service, providing customers with a convenient
framework for information query, allowing facilitation in business development for Bank's various
business units.
M. Establish SFA systems to enhance sales capacity of the wealth management marketing.
N. Establish the new ATM network, incorporate Western Union online services functions, to enhance the
Bank's overall image and the Bank's diversified online customer service.
107
O. Develop system for joint acquisition and receivable, improve operating efficiency and increase the
competitiveness of the Bank.
P. Establishment of the Hong Kong Branch system.
Q. Issuance of cell phones and dual-currency credit card.
R. Build automation platform for development of financial operations in order to integrate and improve
process.
S. Development of Notes application platform:
(I)
The establishment of a corporate finance statistical basis for credit rating model.
(Ii) Financial statement database: with IFRS specification, the Bank builds modules applicable to the
Bank and provides credit rating references
(Iii) Optimization corporate finance "Financial Instrument Exchange questionnaire (KYC)" and provide
automated control processes.
(Iv) Establish digitalized management process of corporate compliance "Regulations Information
Compliance Report".
(V) With the Chinese address normalization and the set up of inquiry services, the Bank integrates
credit card e-Loan address standardization and judgment of suspected problems regarding address
and telephone (NIF / TIF).
T. Expansion of virtualized servers to strengthen the availability and the flexibility of IT equipment and
resources applications.
U. Importation of automated platform changing system which saves time for relevant staff and to improves
the quality of deployed systems development.
V. Build privileged accounts system, which automatically changes password on a regular basis and save
the application / approval records for effective control of information security.
W. Importation of web application firewall (WAF) to reduce the threat of cyber attacks.
X. Use of ADRMS to preserve the security of the internal MS Office document to avoid disclosure and
misappropriation of material information.
Y. Establishment of mechanism that monitors for any irregularity, which will conduct a 24-hour monitoring
and will respond with the proper treatment in accordance with the levels and the standard of service.
108
(3) Future Research and Development Program:
■
From the aspect of risk management
Development of corporate finance quantifying internal credit rating model, establishment of credit rating
integration platform, and fortification of corporate credit risk management.
■
From the aspect of information technology
Recent annual plan
Project Description
R&D
Expenses
(thousand)
Estimated
Completion
Time
The main
factors
affecting the
success of
research and
development
Build new enterprises
network
Provides support for multi-platform / multi-browser / multi-language
ZHEVHUYLFHSODWIRUPIRUFRUSRUDWH¿QDQFHWRLQFUHDVHDFFHVVWR
collection and payment of FXML.
35,000
January,
2016
N/A
Mobile Banking II
Continue to expand the new services for trades and mobilizations,
in order to provide credit card and bank customers access to more
information and personal bank account information on smart phones.
Also, in conjunction with the marketing and interactive function to
provide customers a diversity of user experience and to increase the
reliability.
10,000
December,
2015
N/A
24 hours counter
,QUHVSRQVHWRWKH)6&
VSURMHFWWRFUHDWHGLJLWL]HG¿QDQFLDO
environment 3.0", new 12 items of online business will be added.
Through the establishment of online virtual counter, the Bank provides
customers with 24-hours services.
0
December,
2015
N/A
NTD bond transaction
management system
Build NTD bond transaction management system.
11,000
December,
2015
N/A
Scorecard
(QKDQFHWKHHI¿FLHQF\RIWKH%DQN
VFUHGLWULVNGHFLVLRQRQFRQVXPHU
¿QDQFHDQGWUDLQSHUVRQQHOZLWKVSHFLDOL]DWLRQLQWKHPRGHO
9,900
March,
2016
N/A
Wealth Management
System (FPS) Phase II
Increase KYC, risk vetting, the ordering integration, relationship
between the families and the health clinic and other policy modules.
11,000
May, 2016
N/A
Integrated e-loan
Integrated audit system includes micro-enterprises levy, strategic
alliances of car loan, mortgage, credit, credit cards and other products.
0
July, 2016
N/A
Notes platform to improve
1. Establish collaborative development model.
2. Infrastructure Planning / Design (Process Engine / standardized
user interface / access modular of heterogeneous data).
3. Development and design of NOTES WEB application.
4. Design a single portal.
5. Integration of Services Reporting (SSRS).
6. Support to NOTES applications for mobile devices and development
of active AP.
0
December,
2017
N/A
Seal System Upgrade
In response to the termination of Microsoft's supporting services
Windows XP system, the operating system will upgrade to Win 7.
9,800
September,
2015
N/A
Central job cum remittance
bill image upgrade
In response to the termination of Microsoft's supporting services
Windows XP system, the system will be upgraded in order to ensure
safety of information operation
6,517
December,
2015
N/A
iCash co-branded cards
(Ai-Jin Card)
Issuance of iCash co-branded cards
2,500
June, 2015
N/A
109
R&D
expenses
(thousand)
Estimated
Completion
Time
The main
factors
affecting the
success of
research and
development
0
October,
2015
N/A
Recent annual plan
Project Description
Taiwan Action payment
(debit card)
Promotion of favorable action payment services
EMV transaction liability
transfer mechanisms
The magnetic stripe data of Visa / Master credit card in ATM for cash
advances needs shall change to the reading of chips.
4,820
December,
2015
N/A
ACH Quancun TSM-ACH
service platform and build
project
The new trading system of clearing house is the infrastructure of the
TSM-ACH.
1,600
October,
2015
N/A
FATCA reporting job
Follow the requirements of FATCA to reduce the extent of its impact
0
June, 2015
N/A
Core system customization
needs
:LWKODZVUHTXLUHPHQWVDQGSUDFWLFHVWRLPSURYHHI¿FLHQF\DQGWR
reduce operational risk
5,000
December,
2015
N/A
VISA debit card the second
stage demand
The second stage demands continues to perform in 2015:
1. The function of card issuances in batch
2. Authorization of bulk mailings
7KHHQWLUHEDWFKRIDUWL¿FLDODXWKRUL]HGUHSRUWV
4. Continued card / damaged card replacement: change the card does
not change the 16 digital codes on the credit card
0DLQWHQDQFHIRUWKHVHWWLQJVFUHHQRIPHVVDJHQRWL¿FDWLRQ
6. Consumer details message (if you're sending parameters)
7. Dispute of chargeback
8. The replenishment function of the handling fee after the due
payment
0
December,
2015
N/A
"Fund + Hao-Tou-Jia
¿QDQFHVXUJHU\ZLVGRP
extend ETF platform
development
([WHQGHG+DR7RX-LD¿QDQFHVXUJHU\ZLVGRPSODWIRUPDSSOLFDWLRQV
WRHQKDQFHEXVLQHVVHI¿FLHQF\DQGLQWHUHVWRQWKHSODWIRUP
0
September,
2015
N/A
Tapeless backup
mechanism to improve
1. The integration of the entire core system backup to save the
maintenance costs
'DWDGHGXSOLFDWLRQWHFKQRORJ\WRLPSURYHWKHHI¿FLHQF\RIGDWD
backup and recovery
4,500
April, 2015
N/A
North-funded energy
HI¿FLHQF\LPSURYHPHQWV
CRAC
The project targets to improve the existing system and the
establishment of hot and cold air-conditioning systems and closed
aisle. In addition to improving the existing air conditioning system,
backup mechanism can also supply the required amount of air
conditioning and refrigeration equipment for future growth
4,000
July, 2015
N/A
110
(5) Long- and short-term business development plans
A. Consumer Banking Group
a. Short-term business development plan
1) To add a variety of trust investment products to satisfy the client's regular needs for balance investment.
2) To strengthen the deposit structure and to accordingly launch a variety deposit projects based on the
capital levels on the markets.
3) To strengthen branches' and other access' distribution function to execute KYC and enhance the ability
of identifying the risk.
b. Long-term business development plan:
1) To continue to reform the operation process, concurrently protect consumers' interests and control risks,
and enhance operation efficiency, so as to elevate customer service quality.
2) To continue to proceed with employee educational training and professional cultivation, and to
aggressively train the key personnel equipped with professional knowledge related to consumer finance
to create the maximum of the benefit of the Bank and the employees.
3) To develop the innovative strategies to emphasize the features and ranges of the Bank's product and
their obvious differences from the products of the competitors to build up a price advantages and
enhance the convenience when contacting with clients.
B. Institutional Banking Group
a. Short-term business development plan:
1) Development of new clients: To reinforce the services to existing high quality clients, the Bank's
institutional banking group will maintain its strength to develop new clients by offering its professional
product services, so as to accumulate a new wave of growth momentum.
2) Increase the proportion of SME customers: In the future, the Bank will actively strengthen the
development of SME customers, and improve SME lending loans accounted for the proportion of the
Bank, in order to enhance the earning yields of corporate finance.
3) Strengthen deposit structure: strengthen demand deposits, increase current deposit ratio and improve
the Bank's deposit structure. In addition, the Bank will disperse sources of deposits, aggressively
develop new small business customers whose total deposit is below NT$40 million to enhance the
Bank's liquidity of coverage.
4). Develop differentiated products / services: The Bank has been successful in recent years offering foreign
labors' loans, Western Union and other business of such difference. This year the Bank also expects
to offer strategic alliances vehicle loan business, and in the future the Bank will continue to develop
differentiated products and services, to expand the interest and in response to price competition among
the industry.
5). Overseas business development: Through the OBU and the newly opened Hong Kong Branch, the
Bank is actively exploring the enterprise customers including Taiwanese investors in mainland China,
funds from Hong Kong and the funds from China, in order to enlarge the business scales of overseas
customers' deposits, loans and financial products sales, and the Bank will also set up a dedicated team
to enhance the management and control of corporate banking businesses' risk exposure of China and to
be responsible for the collection and expansion of information of overseas market.
111
6) Optimization of electronic financial services: the completion of the new corporate banking network build,
BANK 3.0 build related businesses as well as on-line bid for a second-order system on-line banking
operations. The Bank hopes that through the optimization of Internet and mobile platforms, there will
be increase of the willingness of customers to use and the reliability degree between the Bank and its
customers to reduce internal costs and improve the Bank's earnings.
7) Personnel training: Actively conduct training and retention of talent in response to the needs for market
competition.
b. Long-term business development plan
1) To continue to enhance the promotion of each product of institutional banking business, and to enhance
the cross-sale service so as to enlarge the market share rate and to elevate its profitability in the aspect
of institutional banking.
2) To catch up the advanced technologies, the Bank will continue to launch electronic online platform from
time to time to reduce costs and enhance the influences of the customers.
3) Due to increasing investments by Taiwanese merchants abroad and in China, other than the OBU and
Hong Kong Branch, the Bank will establish bases in China, expand its business in overseas markets and
improve its earnings from abroad.
4) To continue to strengthen risk control, so as to elevate the Bank's asset quality.
D. Financial Markets Group
a. Short-term business development plan:
1) Maintain solid relationship with counterparties and expand counterparties lines to fulfill the Bank's
funding needs.
2) While continuing to maintain good liquidity positions, the Bank will enhance the security and the earning
yields of the Bank's financial assets portfolio regarding the surplus liquidity.
3) Expand client base, and provide the Bank's comprehensive financial services to corporate customers
having different attributes.
b. Long-term business development plan:
1) Maintain good liquidity positions and stable and efficient trading structure to sustain future balance sheet
growth.
2) Develop business of new products to meet clients' needs.
3) Establish an image of cultivating deep relationship with clients, provide a more mature and complete
services, to strengthen the depth and width of customer's management.
112
2. Related subsidiaries' operating profile and business plan in 2015 are as follows:
(A) TA CHONG SECURITIES CO., LTD.
1. Operations Overview
(1) Brokerage business: in 2014, brokerage business' profit is NT$203.11 million, and the Company's brokerage
market share is 0.81%. In the promotion of its business, the Company continues to closely cooperation with
the Bank, and the Company focuses on implementation of quality of electronic trading service platform,
and comprehensive review of all expenses, in order to build up good relationships with customers, improve
services and save the cost.
(2) Underwriting business: in 2014, the Company assisted and participated in 38 cases in total, and the market
participation rate 16.67%. All of the colleagues put their efforts to expand their business and the Company
has an annual profit of NT$10.19 million.
(3) Proprietary trading business: in response to the impact on the stock market change, the Company's
proprietary trading, research, and other units have to thoroughly implement rules and requirements for stock
picking and maintaining trading order, and to properly hedge against risks. The Company has made an
annual profit of NT$143.53 million.
(4) The main business revenue details are in the following table:
Item
Operating Revenue
Ratio (%)
Brokerage business
668,562
68.66
Underwriting business
37,636
3.87
Proprietary trading business
267,532
27.47
Total
973,730
100.00
2. 2015 Business Plan
Ta-Chong Securities will launch campaigns in response to a number of policies of the FSC to promote Taiwan
stock market to keep up with international standards and in response to cross-strait exchanges of securities
transactions. In the future, the proportion of transactions of domestic and foreign legal entities will increase
gradually, and the structures of brokerage, proprietary trading and underwriting business will need to be
adjusted. The main business plan for 2015 is as follows:
(1) In response to the increase of market share rate of corporate brokerage business, to adjust the business
structure effectively and to improve profit margins.
(2) The implementation of performance appraisal and reward system to hire outstanding professionals and to
enhance their competitiveness.
(3) Strengthen the overall risk control mechanisms to effectively reduce systemic and non-systemic risk and to
reduce operational risks.
(4) Increase the Group's business cooperation synergies to strengthen the flexibility and effectiveness of
business management.
(5) To actively develop new business and develop new products to meet customers' needs and to make the
profit project balanced and diversified.
113
(B) Ta Chong International Finance & Investment Co.
The Company's 2014 operating revenue was NT$208.316 million, which is a decrease of 25.43% compared with
NT$279.342 million in 2013. The after-tax loss (after escrow) was a NT$0.983 million, a decrease of 195.62%
compared with a gain of NT$1.028 million in 2013. This was due to the recognition of investment losses of
NT$1.765 million from the "World Department Store" investment and bad debts of NT$2.528 million in 2014,
turning an otherwise profitable 2014 operation into a loss.
Operating revenue of 2014 mainly comes from the following three items - sales revenue, interest revenue and
rental revenue. Amounts of each revenue are presented separately in the following table, in which the "interest
and other income" is NT$15.720 million, representing an annual growth of 51.78% compared with NT$10.357
million in 2013.
2014
2013
Growth rate
Sales revenue
182,830
259,500
-29.55%
Interest and other income
15,720
10,357
51.78%
Rental revenue
9,766
9,485
2.96%
Total operating revenue
208,316
279,342
-25.43%
2. 2015 Annual Business Plan
Main business plans of 2015 are as follows:
(1) Clean up and do recovery of bad assets, and then examine the cases one by one that have been transferred
to bad debts over the years, and to reduce accumulated losses through the recovery of bad debts or by
settlement or agreement.
(2) Map out the direction of business development, so that a comprehensive leasing business may be
developed.
(3) Increase the personnel specializing at leasing business to comprehensively develop the business.
(4) Improve and enhance risk control, focus on operational activities and development of leasing business,
review the overall business and accounting processes to strengthen risk control mechanisms and to avoid
being affected or manipulated by human factors.
(5) In the future, the Company will enter into the mainland China market through the use of rental platform.
In view of the continued growing cross-strait and Hong Kong markets, and the rapid development of the
economy in mainland China has indicated the great potential opportunities for SME financing market. The
entering into China market through the use of rental platforms will be made after the operating scale in
Taiwan and the training of personnel and the teams specializing in leasing business have been established.
114
(C) Chong-Yin Life Insurance Agent Co.
1.Operations Overview
The Company's business is acting as agent for personal insurance merchandise, and its collects the insurance
commission as the main source of its revenue. In 2014, the operating strategy is continue to promote insurance
business in cooperation with the Bank, providing adequate insurance and diversification of commodity demand
for bank customers. The total annual revenue for 2014 was NT$717.695 million, representing an increase
of NT$44.877 million from NT$672,818 in 2013. The main reason for the increase in revenue was that the
adjustment made by the competent authority on the conditions of certain life insurance products, which increase
the customers' acceptance of insurance products.
In 2015, the Company's product strategy will be to continue to focus on the insurance products with period
payment and a full range of protection, and the timely launch of the market's mainstream products, not only to
guide customers to compare the insurance rate of return of goods, but also to focus on insurance protection and
the long-term commitment that insurance company makes to the customers to assist the customers manage
personal risk of customer better and to achieve a win-win situation where insurance protection is provided to the
customers and an increase of the revenue is generated by the company.
(D) Chong-Yin Non-Life Insurance Agent Co.
The business in 2014 was still mainly residential fire insurance derived from the Bank's mortgage business.
Total revenue for the year 2014 was NT$8.417 million, an increase of NT$0.439 million compared with NT$7.978
million in 2013. The main reason for the revenue increase was that the Company continues to expand product
lines, such as casualty insurance, which provided customers with a more diversified selection of products.
Guided by the policies of the competent authorities, the Company will still look forward to the stable business
of fire insurance, while at the same time continue to promote the residential complex insurance to replace the
traditional dwelling fire insurance, in order to raise premiums of merchandise, to promote the Bank's sales staff
to sell accident insurance and expand the self business such as credit cards comprehensive insurance, which is
also a direction that the Company will put effort to.
115
3. The status of the number of employees, average service seniority, average age, educational
background, professional certificates and licenses held by employees and training programs
in the past two years and before the publication day of the annual report.
Year
2013
2014
February 28, 2015
3,127
3,181
3,227
Average age
38.1
39.8
39.9
Average year employed
7.7
8.5
8.5
Ph. D
0.13%
0.09%
0.09%
Master
12.82%
13.4%
13.3%
Number of employees (Note)
Educational background
Total
College
76.91%
76.01%
75.95%
Senior high school
10.04%
10.37%
10.54%
Below senior high school
0.1%
0.13%
0.12%
3DVVLQJFHUWL¿FDWLRQH[DPLQDWLRQLQEDQN’s internal control
1,612
1,619
1,633
3DVVLQJFHUWL¿FDWLRQH[DPLQDWLRQLQSURIHVVLRQDOWUXVW　business
1,476
1,435
1,465
3DVVLQJDSURIHVVLRQDOFRPSHWHQF\FHUWL¿FDWLRQH[DPLQDWLRQLQ
¿QDQFLDOSODQQLQJ
340
325
328
&HUWL¿FDWLRQH[DPLQDWLRQWREHFRPHDTXDOL¿HGDVVRFLDWHGSHUVRQRI
the personal insurance business.
1,304
1,105
1,120
(DUQLQJWKHDFFRPSOLVKPHQWFHUWL¿FDWHE\SDVVLQJWKHJHQHULF
course examinations in the property insurance business
1,007
1,014
1,031
the business of investment-linked insurance products.
654
626
635
futures commission merchants.
613
598
602
0
2
2
the securities investment trust and consultation business
210
198
202
VHFXULWLHV¿UPV
0
242
242
619
503
509
&HUWL¿FDWLRQH[DPLQDWLRQWREHFRPHDLQYHVWPHQWDQDO\VWV
0
4
4
Eligible securities in wealth management business staff
0
218
218
0DUJLQFOHUNTXDOL¿FDWLRQ
0
91
91
&HUWL¿FDWLRQH[DPLQDWLRQWREHFRPHDTXDOL¿HGVDOHVSHUVRQQHOIRU
structured commodity
0
657
673
Passing a basic professional competency examination in foreign
exchange
222
231
232
Passing a basic professional competency examination to become
TXDOL¿HGFUHGLWSHUVRQQHO
292
307
310
&HUWL¿FDWLRQH[DPLQDWLRQLQLQYHVWPHQWWUXVWDQGFRQVXOWDWLRQUHODWHG
regulations.
662
656
672
&HUWL¿FDWLRQH[DPLQDWLRQWREHFRPHDTXDOL¿HGVKDUHVRI¿FHU
0
7
7
&HUWL¿FDWHRIDTXDOL¿HGOHDVLQJVHUYLFHSHUVRQQHO
1
1
1
&HUWL¿FDWLRQH[DPLQDWLRQWREHFRPHIXWXUHVLQYHVWPHQWDQDO\VW
FHUWL¿FDWH
ames and number of the
SURIHVVLRQDOFHUWL¿FDWHVDQG
licenses held by employees
&HUWL¿FDWLRQH[DPLQDWLRQWREHFRPHDTXDOL¿HGVDOHVPDQDW
VHFXULWLHV¿UPV
Note: from 2013, the number of employees includes subsidiaries' employees.
$VRI)HEUXDU\WKH%DQNDQGLWVVXEVLGLDULHVKDGRI¿FHHPSOR\HHVLQZKLFKDQXPEHURISDUWLFLSDWHGLQWUDLQLQJUHSUHVHQWLQJDWRWDORI
132,712.58 training hours (including three major kinds of training - centralized training held by the Bank and its subsidiaries, training individually held by respective
business groups and external training at Taiwan Academy of Banking and Finance). On the average, each employee's training participation frequency was 27.63
times and the training length was 41.13 hours.
116
4. Corporate Social Responsibility and Ethical Behavior
Implementation of Corporate Governance
In order to take the corporate social responsibility, to establish corporate culture of integrity management, in addition
to following up the various government policies and laws and regulations at any time that may affect the company's
financial interest or business, the Bank also continues to strengthen the protection of personal data, money
laundering control, consumer protection measures and attention to issues such as human rights of interested parties,
in order to enhance the Bank's corporate governance, regulatory compliance, environmental protection, employee
development and transparency of information as the goals of efforts. The Bank has enacted "Ethical principles of
Practice" and "Principles of Ethics" by strengthening protection measures of whistleblower (whistleblower) and will
also expand the range of "integrity management", not only to be against anti-corruption, but also to emphasize the
protection of trade secrets and the prohibition of acts of unfair competition.
Corporate Social Responsibility
As a social citizenship, corporate social responsibility is also one of the most important issues of this century. As a
member of one of the social citizenship, in additional to improving profitability through financial professionals to return
to the trust of customers, the supports of shareholders and the efforts of employees, the Bank will create a better life
value for the society. Meanwhile, the Bank also encourages colleagues to participate in positive community activities
to develop the attitude of the volunteerism, and to participate in community development and other related activities
sponsored by charitable organizations by commercial activities, stuff donations, corporate volunteer services or
other free professional services. In 2014, there are staff in the Bank's branches being traffic guide around schools,
branches holding music concert and inviting customers and the neighborhood to listen to the music, providing a
platform for community, branches participating in community greening activities to help residents clean up parks to
provide cleaner space for leisure and activities. Normally, branches also provide arcade space for the blood donation
center to set up blood donor centers, and regularly hold speeches about advocacy of free blood pressure and blood
sugar check and health checks cooperated with the nutritionist of neighboring hospitals, to promote of various medical
and health educational information.
The Bank also participated in sponsorship of activities related social care, cultural events, social cultural, educational
and sports in 2014:
1. In the aspect of social care, the Bank assisted Kaohsiung City Government on the relief effort the households
affected by gas explosion at Chienchen District and Lingya District, in the names of the Bank and the Bank's
chairman Chien-Ping Chen's family -"Chen Chung-Ho foundations" and Ta-Chong securities Co., Ltd., the Bank
took the lead to donate funds to Kaohsiung Government to assist on the reconstruction of Kaohsiung gas explosion
disaster, while at the same time gave a delay payment of interest in terms of the repayment of preferential loans
and provided care for reconstruction loan projects for the customers affected by the explosion.
2. In the aspect of arts activities, the Bank sponsored 3E Youth Philharmonic in their 2014 annual charity concert,
Kaohsiung Medical University for their charity concert and 2014 international tour program of NSO & Friends Gala
Concert.
117
3. In the aspect of social culture and education, the Bank sponsored the Taipei City Dwen-An Social Welfare
Foundation to assist the Foundation in its continued push for the integration of social resources, to put efforts
together on teenagers' mental health, pluralistic development and social participation. In addition, to focus on the
future development of children, the Bank continued to sponsor National Taiwan University Hospital on the research
of Attention Deficit Hyperactivity Disorder and Autism to reduce the amount of children with neuropsychiatric
disorders, to reduce the long-term impact cause to the person, family and society, and to develop an early
diagnosis and effective prevention and treatment methods as earlier as possible to benefit the autism patients. In
addition, the Bank sponsored the 2014 international volunteer medical program of Kaohsiung Medical University in
Malawi in response to the idea of international volunteer service of Kaohsiung Medical University, and to provide
health care knowledge and education courses to the poor developing country resident to help improve the local
living environment for them to bring about change hope.
4. In the aspect of sports activities, in addition to sponsoring the Asian Junior Athletics Championships, and promoting
the concept of "health and movement", the Bank continued to co-sponsor "2014 Yung-Ching Road Race Events"
held by Kaohsiung Chang Gung Memorial Hospital in response to the promotion of connection between national
sport and corporate to best practice the Bank's corporate social responsibility.
Secondly, the Ta-Chong securities regularly sponsors activities of Yimin Temple in Sanmin District, Kaohsiung City
including visiting orphanage to give cares to the education of their children and donated materials to Chi-Hsiang-Chen
Social Welfare Foundation, Tzu-Te orphanage and Yung-An House and other related social welfare organizations .
In addition, in three major festival-Chinese New Year, Dragon Boat Festival and Moon Festival the Bank mainly
purchase gifts from disadvantaged organizations.
Please refer to "3. Corporate governance / 4. Corporate governance operation / 6. CSR" in this annual report to check
the corporate social responsibility of the Bank and its subsidiaries.
118
5. IT facilities：
The main information systems hardware, software configuration and maintenance, future development or acquisition
plans and emergency backup and security measures.
(1) Deployment of hardware and software of major information systems
Item
Name of the System
Hardware
Taiwan Currency core
system
(Flexcube)
▓
2
ATM
(FEP)
▓
3
Credit Card System
(Asccend)
▓
4
Trust System
▓
1
Software
▓
IBM pSeries
▓
▓
IBM RS/6000
▓
▓
IBM AS/400 (iSeries)
▓
▓
IBM AS/400 (iSeries)
▓
▓
▓
5
Financial System
(Kondor)
(VaR)
7
Bond ticket system
ABS
Enterprise network services
FDVKÀRZ
(B2B)
▓
▓
▓
▓
6
SUN M5000
IBM X86 Server
▓
▓
▓
IBM RS/6000
▓
▓
▓
HP X86 Server
▓
IBM AIX
ORACLE
IBM AIX
IBM MQ
OS/400
DB2
OS/400
DB2
Solaris
JBOSS
Sybase
MS Windows
MS SQL
IBM AIX
IBM MQ
MS Windows
MS SQL
Content of the Business
▓
▓
▓
▓
▓
Credit card business
▓
Trust business
Fund business
Custodian bank
▓
▓
▓
▓
▓
▓
▓
Taiwan or foreign currency trading
inquiry
Taiwan or foreign currency
remittances
ACH collection / generation pay
Valet ticket printing
9HQGRU¿QDQFLQJ
▓
▓
▓
WEB ATM
Account Information
Credit Card Information
Transfer
Investment Services
Deposit service
Foreign Exchange Services
Fee / tax
▓
MDM
▓
Business Finance CRM
management system
Consumer banking CRM
management system
▓
▓
▓
HP X86 Server
▓
MS Windows
MS SQL
▓
▓
▓
▓
9
Database Integration
System
10
Sales process application
system
(SFA)
▓
▓
▓
▓
IBM X260
IBM 7870
HP DL380
▓
▓
▓
MS Windows
MS SQL
MS Windows
MS SQL
Securities system
6XERUGLQDWHG¿QDQFLDOERQGV
¿QDQFLDOV\VWHP
Business system of tickets and
bonds
▓
▓
Finance Treasury transactions
Transaction risk controlling
systems
▓
▓
Internet Banking
(Personal Finance)
ATM pre-processing
Finance liquidation deal
▓
▓
8
FCC consumer banking module
FCR corporate finance Module
Foreign Exchange system
▓
(2) Maintenance and emergency backup of major information equipment
The Bank has emergency backup of clusters, heat engine or backup machine to provide stable and dependable
system operation environment; backup center for the core billing system is set in Information Office in Taipei.
The Bank has backup standard operation procedures; drills are duly made each year to enhance response in
disasters in the hope to resume operation in the shortest time under disasters to minimize the impacts to users.
119
(3) Information equipment security protection measures
A. Brick-and-mortar protection: the Computer Center has floor security, surveillance system, environment
monitoring and fire system.
B. Network protection: The Bank has multi-section invasion protection system and multiple internal/external
firewalls to enhance information security of the internal network.
C. System management and anti-virus system: The Bank has periodical inspection on system security,
weakness scan, network security, anti-virus wall and software to enhance information security and ensure
operation service quality.
(4) Future development and procurement plans:
1. Expansion and transfer of core system resources to increase the performance and availability of core system
host and storage availability space.
2. Continue to replace its entire old server through virtualization technology to reduce maintenance and
operation costs, and to improve application availability.
3. Integration and optimization of all levels of operating systems and data backup mechanisms, storage in
classification and to reduce the media difference.
4. Build tapeless offsite backup systems, remote copy after data reduplication to prevent the risk of the tape
transport and storage labor costs.
5. Use the internet encryption technology to enhance transport security, facilitate the use of low-cost data lines
for remote copy.
6. Import Green Room equipment in the machinery room and conduct energy-saving plan in order to save costs
and to meet environmental symbiosis purposes.
(5) No other important information about development or purchase plans of related to subsidiaries.
120
6. Labor relations of this Bank and its subsidiaries:
(1) Labor welfare measures, retirement system and their implementation, and the collective bargaining
agreement between management and labor and status on the protective measures on employees' right:
A. Benefits
The Bank provides employees with labor and health insurance and group insurance, which includes life
insurance, accident insurance, cancer insurance, hospitalization insurance and insurance for their dependents,
with health examinations conducted periodically. The Bank's employee welfare committee has been in existence
for many years. It provides employees with cash gifts for the three most important Chinese festivals, their
birthdays, and financial assistance in the event of marriages, childbirths, and for children's education, as well as
for travel, hospitalization and funerals. The Bank has a well-rounded training program that includes training for
new employees, specialist training, workshops, and training in safety and health.
B. The retirement system
The Bank has an Employee Retirement Fund Supervision Committee, which provides retirement pension for
managers from the Committee's designated bank account. In addition, the Labor Retirement Fund Supervision
Committee is in place to offer retirement pension for employees from the fund appropriated from TC Bank to the
Bank of Taiwan. The Committee is also responsible for processing related retirement fund subject to internal
policy related to employees' retirement. The Bank also appropriates retirement reserve to individual accounts
of employees in the Council of Labor Affairs based on the choice of individuals and new colleagues who qualify
under the new retirement rules.
C. Agreement between the interests of employers and employees and any the measures of maintenance of
employees' rights.
The Bank completed the signing of a collective agreement with the labor union on March 31, 2014, to maintain
harmonious labor relations and also convened the meetings in accordance with the labor standards to negotiate
their interests and the resolution meetings are well executed. The Bank's main sub Ta-Chong securities
shareholders' meeting approved the allotment of employee bonuses to compliment the staff's efforts during
these years. According to the level of the contribution and the annual results of evaluation, the Company publicly
awards outstanding employees and usually communicates with employees through various ways to understand
employees' needs and to promote harmonious relations between employers and employees.
(2) Any loss incurred from labor-management disputes in the recent year and as of the annual report was
put in press, and a disclosure of current and future estimated loss as well as measures in response
In August 2009, 11 employees of the Bank filed a lawsuit against the Bank for recovery of their employment
relationship with the Bank, and requested the Bank to pay their lost wages of NT$9,819,336 plus interest
calculated at 5% annual rate. In this lawsuit, the Bank won on April 30, 2011 in the first instance. The plaintiffs
appealed to the high court where the Bank won the case on May 30, 2013. Two of the plaintiffs then appealed to
the Supreme Court, and the court dismissed their appeals as a definitive judgment on April 7, 2014. The Bank's
sub Ta-Chong securities does not have any labor dispute that lead to a loss of operating results.
121
7. Material contracts:
(A) The parties, main contents of the contract, start dates and restrictions of outsourcing contract, technical
cooperation contracts, engineering contracts, external borrowing long-term loan contracts and others
that materially affect depositors or shareholders' equity valid as of the date of publishing of the annual
report and due in the recent previous year:
Contract
System Outsourcing
Contract with Amount
Equal to or Exceeding
NT$10,000,000
Restricti
ons
Counterparty
Contract Term
Major Contents
FinIQ Consulting Pte. Ltd. (Taiwan
Branch)
2010/03/12 ~2015/11/17
System development and maintenance
None
Chin-Jie-Shing Information Corporation
)URPWR¿QDO
acceptance
System development and maintenance
None
Ho-Hsing Construction Co., Ltd.
2012/08/01 ~2016/07/31
(1) 4F-8F, No.58, Zhong-Zheng 2nd Rd.,
Kaohsiung City
(2) No.11-2, Zhong-Zheng 2nd Rd.,
Kaohsiung City
(3) 1F-2F, No.218, Bo-Ai 1st Rd.,
Kaohsiung City
None
AURORA International Corporation, ChinYi Co., Ltd., Hu-Sheng Co., Ltd, and
Aurora Corporation
2013/07/01~2018/06/30
Headquarter and Operation Division
None
%DQN2I¿FH/HDVH
Contract Exceeding
NT$100,000,000
Bank Construction
Contract Equal
to or Exceeding
NT$50,000,000
None
Single contract for
purchase of NT$10
million or above
ARES INTERNATIONAL CORPORATION
From 2014/05/22~ End
of warrant
Establishment of computer hardware
and software of Hong Kong Branch
None
Single contract for
system implementation
of NT$10 million or
above
Einstein Technology, CONSILIUM
SOFTWARE INC (PTE.) LTD
From 2014/01/13 to
RQH\HDUDIWHUWKH¿QDO
acceptance of systems
as the end of warrant
System implementation and
maintenance
None
System Maintenance
NT$10,000,000
IBM Taiwan
2012/07/01~2015/06/30
System maintenance for all branches
None
Software Licensing
NT$10,000,000
SYSTEX Corporation
2012/10/01~2015/09/30
A three years EA agreement renewal for
Microsoft software.
None
(B) Other material contracts of the subsidiaries:
None.
8. Information and types of securitization products applied and approved in accordance
with the Financial Asset Securitization Act and Real Estate Securitization Act, and related
information:
None.
122
VI
Financial Statements
VI Financial Statements
1.Summary of Balance Sheets and Income Statements in the Recent Five Years
(1) International Financial Reporting Standards (IFRS)
i. Summary of Balance Sheets – By International Financial Reporting Standards (consolidated)
)LQDQFLDOLQIRUPDWLRQLQUHFHQW¿YH\HDUV1RWH
Year
2014
Items
2013
2012
2011
&DVKDQGFDVKHTXLYDOHQWVGXHIURP&HQWUDO
Bank of China and other banks
17,581,019
31,191,847
21,398,447
)LQDQFLDODVVHWVDWIDLUYDOXHWKURXJKSUR¿WRUORVV
35,842,270
28,126,082
23,969,660
$YDLODEOHIRUVDOH¿QDQFLDODVVHWV
83,129,463
94,400,239
99,423,130
)LQDQFLDODVVHWVGHULYHGIRUKHGJHSXUSRVH
5HSRDQGERQGLQYHVWPHQW
5HFHLYDEOHV±QHWYDOXH
Current income tax assets
0
0
0
1,971,409
2,520,667
3,050,106
23,050,004
22,286,982
20,182,828
114,749
163,088
68,763
$VVHWVKHOGIRUVDOH±QHWYDOXH
0
0
0
'LVFRXQWVDQGORDQV±QHWYDOXH
286,691,683
263,546,113
277,835,479
+HOGWRPDWXULW\¿QDQFLDODVVHWV
0
0
0
,QYHVWPHQWVDFFRXQWHGIRUE\WKHHTXLW\PHWKRG
Restricted assets
2WKHU¿QDQFLDODVVHWV±QHWYDOXH
5HDOHVWDWHDQGHTXLSPHQW±QHWYDOXH1RWH
5HDOHVWDWHIRULQYHVWPHQWSXUSRVH±QHWYDOXH
0
0
0
282,000
282,000
346,000
11,334,246
1,365,895
470,846
3,276,820
3,342,534
3,278,778
0
0
0
,QWDQJLEOHDVVHWV±QHWYDOXH
2,367,703
2,413,667
2,476,970
'HIHUUHGLQFRPHWD[DVVHWV±QHWYDOXH
1,891,206
2,395,832
2,660,027
Other assets
5,114,807
1,342,639
1,387,849
Total assets
472,647,379
453,377,585
456,548,883
18,002,929
20,122,998
21,780,196
0
0
0
12,261,551
6,868,114
8,837,658
4,179
5,449
8,049
18,794,224
20,047,967
22,177,735
7,732,001
8,598,196
8,282,460
37,650
60,684
47,122
0
0
0
343,590,852
340,511,249
343,430,252
Due to Central Bank of China and other banks
Due from Central Bank of
China and other banks
)LQDQFLDOOLDELOLWLHVDWIDLUYDOXHWKURXJKSURILW
or loss
)LQDQFLDOOLDELOLWLHVGHULYHGIRUKHGJHSXUSRVH
Repo and bond liabilities
Payables
Current income tax liabilities
Liabilities directly related to assets held for
sale
Deposits and remittances
Bond payable
23,414,551
15,542,432
15,132,939
Preferred stock liabilities
1,635,380
1,635,380
1,635,380
Other financial liabilities
9,977,688
6,144,103
4,680,303
607,972
605,434
538,676
3URYLVLRQ
Deferred income tax liability
Other liabilities
53,525
188,708
151,270
783,420
363,548
251,094
Before distribution
436,895,922
420,694,262
426,953,134
After distribution
undistributed
420,694,262
426,953,134
32,603,787
29,521,574
26,540,253
25,805,739
23,897,922
22,477,734
undistributed
25,805,739
23,897,922
Total liabilities
Equity attributed to owners of the parent
Before distribution
Capital
After distribution
124
2010
Year
2014
Items
&DSLWDOUHVHUYHV
2013
2,095,443
Before distribution
2012
2,012,287
2011
2010
1,931,638
4,775,446
4,089,586
2,876,703
undistributed
2,181,769
1,456,515
Retained earnings
After distribution
Other equities
276,037
171,552
69,467
Treasury stock
(348,878)
(649,773)
(815,289)
1RQFRQWUROOLQJLQWHUHVW
Total stockholders'
equity
Before distribution
After distribution
3,147,670
3,161,749
3,055,496
35,751,457
32,683,323
29,595,749
undistributed
32,683,323
29,595,749
8QTXDOL¿HGRSLQLRQ 8QTXDOL¿HGRSLQLRQ 8QTXDOL¿HGRSLQLRQ
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&KHQ+VLX<DQJ
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1DPHVRI&3$
&KHQ+VLD<DQJ
.XDQ&KXQJ/DL
+XHL<LQ&LRX
.XDQ&KXQJ/DL
1RWH&RPSDQLHVZKLFKKDYHQRWDGRSWHG,)56IRU¿QDQFLDOUHSRUWLQJIRU¿YH\HDURUORQJHUVKRXOGDOVRSURYLGHDVWDWHPHQWSUHSDUHGLQDFFRUGDQFHZLWKWKH
¿QDQFLDODFFRXQWLQJVWDQGDUGVRI7DLZDQ$VVKRZQRQWKHQH[WSDJH
1RWH,QUHFHQW\HDUVQRQHZDSSUDLVDORIDVVHWKDVEHHQGRQH
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VUHVROXWLRQLQWKHIROORZLQJ\HDU
LL6XPPDU\RI,QFRPH6WDWHPHQWV%\,QWHUQDWLRQDO)LQDQFLDO5HSRUWLQJ6WDQGDUGVFRQVROLGDWHG
Year
Items
2014
Interest Income
9,483,766
8,832,701
9,479,127
Less: interest expense
4,097,623
4,053,714
4,518,013
1HWLQWHUHVWLQFRPH
5,386,143
4,778,987
4,961,114
1HWQRQLQWHUHVWUHYHQXH
1HWLQFRPH
2013
2012
2011
4,905,247
5,095,323
3,777,489
10,291,390
9,874,310
8,738,603
13/H[SHQVHDQGUHVHUYHIRUORVVHVRQJXDUDQWHH
481,951
721,177
1,069,684
Operating expenses
6,536,981
6,051,661
5,999,465
Income before income tax from continuing
operations
3,272,458
3,101,472
1,669,454
Tax expense (income)
(505,519)
(362,376)
(316,623)
1HWLQFRPHIURPFRQWLQXLQJRSHUDWLRQV
2,766,939
2,739,096
1,352,831
0
0
0
2,766,939
2,739,096
1,352,831
P&L of Unit/Business Discontinued
1HWLQFRPHORVV
2WKHU&RPSUHKHQVLYH,QFRPH1HWDIWHU7D[
56,453
102,531
334,912
7RWDO2WKHU&RPSUHKHQVLYH,QFRPH
2,823,392
2,841,627
1,687,743
1HW3UR¿WRI2ZQHURI3DUHQW&RPSDQ\
2,635,095
2,656,315
1,369,600
131,844
82,781
(16,769)
2,698,162
2,735,156
1,654,470
125,230
106,471
33,273
1.04
1.15
0.58
1HW3UR¿WRI1RQFRQWUROOLQJ,QWHUHVWV
7RWDO&RPSUHKHQVLYH,QFRPHRI2ZQHURI3DUHQW
Company
7RWDO&RPSUHKHQVLYH,QFRPHRI1RQFRQWUROOLQJ
Interests
Earnings per Share
2010
1RWH&RPSDQLHVZKLFKKDYHQRWDGRSWHG,)56IRU¿QDQFLDOUHSRUWLQJIRU¿YH\HDURUORQJHUVKRXOGDOVRSURYLGHDVWDWHPHQWSUHSDUHGLQDFFRUGDQFHZLWKWKH¿QDQFLDO
accounting standards of Taiwan. As shown on the next page.
1RWH/RVVIURPGLVFRQWLQXHGRSHUDWLRQVSURYLGHGKHUHLQEHIRUHLVLWVQHWDPRXQWDIWHUWD[
125
iii. Summary of Balance Sheets – By International Financial Reporting Standards (standalone)
Year
2014
Items
&DVKDQGFDVKHTXLYDOHQWVGXHIURP&HQWUDO%DQN
of China and other banks
2013
17,080,165
2012
30,663,794
2011
20,565,457
)LQDQFLDODVVHWVDWIDLUYDOXHWKURXJKSUR¿WRUORVV
32,911,268
24,484,203
20,474,366
82,993,326
94,161,123
99,270,250
0
0
0
)LQDQFLDODVVHWVGHULYHGIRUKHGJHSXUSRVH
0
0
0
17,314,462
17,003,405
15,786,965
108,915
153,320
65,352
$VVHWVKHOGIRUVDOH±QHWYDOXH
0
0
0
'LVFRXQWVDQGORDQV±QHWYDOXH
286,930,583
263,546,113
277,835,479
+HOGWRPDWXULW\¿QDQFLDODVVHWV
0
0
0
1,860,089
1,824,958
1,724,853
5HFHLYDEOHV±QHWYDOXH
Current income tax assets
,QYHVWPHQWVDFFRXQWHGIRUE\WKHHTXLW\PHWKRG
Restricted assets
0
0
0
10,980,948
917,451
77,951
5HDOHVWDWHDQGHTXLSPHQW1RWH±QHWYDOXH
2,606,182
2,650,334
2,611,887
5HDOHVWDWHIRULQYHVWPHQWSXUSRVH±QHWYDOXH
0
0
0
,QWDQJLEOHDVVHWV±QHWYDOXH
2,350,713
2,395,292
2,459,174
'HIHUUHGLQFRPHWD[DVVHWV±QHWYDOXH
1,883,693
2,384,453
2,647,822
Other assets
4,908,345
1,245,221
1,233,275
461,928,689
441,429,667
444,752,831
18,002,929
20,122,998
21,780,196
0
0
0
12,072,919
6,597,886
8,708,939
2WKHU¿QDQFLDODVVHWV±QHWYDOXH
Total assets
Due from Central Bank of China and other banks
)LQDQFLDOOLDELOLWLHVDWIDLUYDOXHWKURXJKSUR¿WRUORVV
)LQDQFLDOOLDELOLWLHVGHULYHGIRUKHGJHSXUSRVH
Repo and bond liabilities
Payables
Current income tax liabilities
Liabilities directly related to assets held for sale
Bond payable
4,179
5,449
8,049
15,491,277
15,761,107
17,245,597
5,796,187
6,501,217
6,419,735
23,438
50,594
40,515
0
0
0
344,565,894
342,179,781
344,419,105
23,414,551
15,542,432
15,126,965
1,635,380
1,635,380
1,635,380
2WKHU¿QDQFLDOOLDELOLWLHV
6,957,009
2,518,666
1,981,336
560,782
555,811
479,744
53,102
186,112
147,897
747,255
250,660
219,120
3URYLVLRQ
Deferred tax liability
Other liabilities
Before distribution
429,324,902
411,908,093
418,212,578
After distribution
undistributed
411,908,093
418,212,578
1RWDSSOLFDEOH
1RWDSSOLFDEOH
1RWDSSOLFDEOH
Total liabilities
Equity attributed to owners of the parent
Before distribution
25,805,739
23,897,922
22,477,734
undistributed
25,805,739
23,897,922
2,095,443
2,012,287
1,931,638
Capital
After distribution
&DSLWDOUHVHUYHV
126
2010
Year
2014
Items
Before distribution
2013
2012
2011
4,775,446
4,089,586
2,876,703
undistributed
2,181,769
1,456,515
Other equities
276,037
171,552
69,467
Treasury stock
(348,878)
(649,773)
(815,289)
1RWDSSOLFDEOH
1RWDSSOLFDEOH
1RWDSSOLFDEOH
32,603,787
29,521,574
26,540,253
undistributed
29,521,574
26,540,253
2010
Retained earnings
After distribution
1RQFRQWUROOLQJLQWHUHVWV
Before distribution
Total stockholders' equity
After distribution
8QTXDOL¿HGRSLQLRQ 8QTXDOL¿HGRSLQLRQ 8QTXDOL¿HGRSLQLRQ
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1DPHVRI&3$
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LY6XPPDU\RI,QFRPH6WDWHPHQWV±%\,QWHUQDWLRQDO)LQDQFLDO5HSRUWLQJ6WDQGDUGVVWDQGDORQH
Year
2014
Items
2013
2012
2011
Interest Income
9,238,027
8,629,056
9,265,759
Less: interest expense
4,032,630
3,988,165
4,447,669
1HWLQWHUHVWLQFRPH
5,205,397
4,640,891
4,818,090
1HWQRQLQWHUHVWUHYHQXH
4,151,588
4,404,131
3,203,315
1HWLQFRPH
9,356,985
9,045,022
8,021,405
479,422
720,787
1,075,781
Operating expenses
5,763,881
5,319,695
5,270,847
Income before tax from continuing operations
3,113,682
3,004,540
1,674,777
,QFRPH7D[H[SHQVH%HQH¿WV
(478,587)
(348,225)
(305,177)
1HWLQFRPHIURPFRQWLQXLQJRSHUDWLRQV
2,635,095
2,656,315
1,369,600
0
0
0
2,635,095
2,656,315
1,369,600
63,067
78,841
284,870
2,698,162
2,735,156
1,654,470
1HW3UR¿WRI2ZQHURI3DUHQW&RPSDQ\
1RWDSSOLFDEOH
1RWDSSOLFDEOH
1RWDSSOLFDEOH
1HW3UR¿WRI1RQFRQWUROOLQJ,QWHUHVWV
1RWDSSOLFDEOH
1RWDSSOLFDEOH
1RWDSSOLFDEOH
1RWDSSOLFDEOH
1RWDSSOLFDEOH
1RWDSSOLFDEOH
1RWDSSOLFDEOH
1RWDSSOLFDEOH
1RWDSSOLFDEOH
1.04
1.15
0.58
13/H[SHQVHDQGUHVHUYHIRUORVVHVRQJXDUDQWHH
P&L of Unit/Business Discontinued
1HWLQFRPHORVV
2WKHU&RPSUHKHQVLYH,QFRPH1HWDIWHU7D[
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Earnings per Share
2010
1RWH/RVVIURPGLVFRQWLQXHGRSHUDWLRQVSURYLGHGKHUHLQEHIRUHLVLWVQHWDPRXQWDIWHULQFRPHWD[
127
(2) Financial Accounting Standards of Taiwan
i. Summary of Balance Sheets – By Financial Accounting Standards of Taiwan (consolidated)
Year
2012
Items
2011
2010
&DVKDQGFDVKHTXLYDOHQWVGXHIURP&HQWUDO%DQNRI&KLQD
and other banks
20,875,102
24,396,905
15,914,117
)LQDQFLDODVVHWVZLWKIDLUYDOXHDGMXVWPHQWDFFRXQWHGDVJDLQ
loss
24,629,938
21,784,999
22,522,211
3,050,106
2,044,389
1,446,001
)LQDQFLDODVVHWVWKDWDUHDYDLODEOHIRUVDOH
Discounts and loans
5HFHLYDEOHV
99,423,130
111,616,968
89,198,032
277,835,479
280,376,703
257,311,098
18,847,224
18,024,020
18,345,776
¿QDQFLDODVVHWVWREHKHOGWRPDWXULW\
0
0
0
LQYHVWPHQWVDWHTXLW\
0
0
130,806
¿[HGDVVHW1RWH
2,940,453
2,987,559
3,481,524
Intangible assets
2,460,785
2,539,050
2,505,982
Other Financial Assets
Other Assets
Total assets
deposits and remittances
694,983
959,372
117,345
4,249,453
4,470,538
6,229,687
455,006,653
469,200,503
417,202,579
21,780,196
32,594,099
26,515,829
343,430,252
351,604,941
303,603,190
Payables
6,908,146
7,927,335
6,241,467
)LQDQFLDOOLDELOLWLHVZLWKIDLUYDOXHDGMXVWPHQWDFFRXQWHGDV
gain/loss
7,894,158
7,751,798
6,767,015
Bills & Bonds Sold under Repurchase Agreements
22,177,735
20,555,060
22,216,960
Funds Borrowed from Central Bank & Banks, Bank Debenture
Issued
15,412,328
12,647,596
16,401,805
1,635,380
1,635,380
1,635,380
accrued pension liabilities
Other liabilities
Total liabilities
Capital
&DSLWDOUHVHUYHV
Retained earnings
627,746
373,673
1,479,359
440,381,984
390,011,118
$IWHUGLVWULEXWLRQ1RWH
424,560,267
440,437,541
390,011,118
%HIRUHGLVWULEXWLRQ1RWH
22,477,734
21,834,693
21,834,693
23,897,922
22,477,734
21,834,693
3,156,735
3,167,462
3,092,754
3,156,735
3,143,705
3,092,754
2,597,003
1,540,584
(499,590)
1,176,815
865,743
(499,590)
126,392
(257,028)
(144,978)
(122,093)
(65,168)
(80,384)
6WRFNKROGHUV
(TXLWLHV$GMXVWPHQWV
1DPHVRI&3$
128
0
5,150,113
424,560,267
8QUHDOL]HGJDLQRUORVVRQ¿QDQFLDOLQVWUXPHQW
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5,292,102
&XPXODWLYHWUDQVODWLRQDGMXVWPHQW
Total Stockholders' Equity
0
4,694,326
2,210,615
2,597,976
2,988,966
30,446,386
28,818,519
27,191,461
30,446,386
28,762,962
27,191,461
8QTXDOL¿HGRSLQLRQ
8QTXDOL¿HGRSLQLRQ
XQTXDOL¿HG
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1RWH
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ii. Summary of Income Statements – By Financial Accounting Standards of Taiwan (consolidated)
Year
2012
Items
2011
2010
1HW,QWHUHVW,QFRPH
5,181,803
4,937,426
4,620,872
1HW1RQ,QWHUHVW5HYHQXH
3,877,051
3,645,963
4,174,369
13/H[SHQVHV
1,067,982
(73,056)
989,449
Operating Expenses
5,960,951
6,323,415
6,232,699
Before Tax Income (Loss) for Continuing Operations
2,029,921
2,333,030
1,573,093
After Tax Income (Loss) for Continuing Operations
1,712,309
1,905,038
951,114
0
0
0
1,712,309
1,905,038
951,114
0.79
0.91
0.41
&XPXODWLYH(IIHFWRI&KDQJHVLQ$FFRXQWLQJ3ULQFLSOH
1HWDPRXQW$IWHU7D[
1HWLQFRPHRUORVVIRUFXUUHQWSHULRG
Earnings per Share
1RWH$OO¿QDQFLDOVWDWHPHQWVLQUHFHQW¿YH\HDUVZHUHDXGLWHGE\WKH&3$7KH&RPSDQ\KDVDGRSWHG,)56IRU¿QDQFLDOVWDWHPHQWVVLQFH3OHDVHUHIHUWRWKH
¿QDQFLDOLQIRUPDWLRQSUHSDUHGLQDFFRUGDQFHZLWK,)56DVVKRZQLQWKHIRUHJRLQJ
VUHVROXWLRQLQWKHIROORZLQJ<HDU
1RWH7KHDVVHWORDQDQGRSHUDWLRQRIWKH6HFRQG&UHGLW&RRSHUDWLYHRI.DRKVLXQJOLPLWHGOLDELOLWLHVZHUHJHQHUDOO\DVVXPHGE\WKHFRPSDQ\LQVRWKH
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129
iii. Summary of Balance Sheets – By Financial Accounting Standards of Taiwan (standalone)
Year
2012
Items
2011
2010
&DVKDQGFDVKHTXLYDOHQWVGXHIURP&HQWUDO%DQNRI&KLQD
and other banks
20,565,457
23,749,265
15,564,028
)LQDQFLDODVVHWVZLWKIDLUYDOXHDGMXVWPHQWDFFRXQWHGDVJDLQ
loss
20,474,366
17,976,880
19,484,667
)LQDQFLDODVVHWVWKDWDUHDYDLODEOHIRUVDOH
Discounts and loans
5HFHLYDEOHV
0
0
0
99,270,250
111,494,007
88,865,846
277,835,479
280,376,703
257,311,098
15,852,317
15,018,891
13,643,526
¿QDQFLDODVVHWVWREHKHOGWRPDWXULW\
0
0
0
LQYHVWPHQWVDWHTXLW\
1,709,156
1,621,906
1,569,037
¿[HGDVVHW1RWH
2,611,887
2,659,835
3,207,596
Intangible assets
2,459,174
2,537,517
2,505,982
77,951
79,109
89,697
Other Financial Assets
Other Assets
Total assets
3,758,394
3,914,782
4,574,469
444,614,431
459,428,895
406,815,946
21,780,196
32,594,099
26,515,829
344,419,105
352,669,744
304,599,297
Payables
6,460,250
7,469,211
5,956,689
)LQDQFLDOOLDELOLWLHVZLWKIDLUYDOXHDGMXVWPHQWDFFRXQWHGDV
gain/loss
7,765,439
7,683,566
6,580,900
Bills & Bonds Sold under Repurchase Agreements
17,245,597
16,638,635
20,417,673
Due from Central Bank and other Banks. Financial
Debentures.
15,412,328
12,647,596
16,401,805
1,635,380
1,635,380
1,635,380
deposits and remittances
accrued pension liabilities
Other liabilities
Total liabilities
Capital
&DSLWDOUHVHUYHV
Retained earnings
0
0
0
1,989,385
2,035,237
252,954
486,863
250,275
381,699
417,194,543
433,623,743
382,742,226
417,194,543
433,679,300
382,742,226
22,477,734
21,834,693
21,834,693
23,897,922
22,477,734
21,834,693
3,156,735
3,167,462
3,092,754
3,156,735
3,143,705
3,092,754
2,597,003
1,540,584
(499,590)
1,176,815
865,743
(499,590)
8QUHDOL]HGJDLQRUORVVRQ¿QDQFLDOLQVWUXPHQW
133,073
(248,923)
(141,065)
&XPXODWLYHFRQYHUVLRQDGMXVWPHQW
(122,093)
(65,168)
(80,384)
6WRFNKROGHUV
(TXLWLHV$GMXVWPHQWV
(822,564)
(423,496)
(132,688)
Total Stockholders' Equity
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130
27,419,888
25,805,152
24,073,720
27,419,888
25,749,595
24,073,720
8QTXDOL¿HGRSLQLRQ
8QTXDOL¿HGRSLQLRQ
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1RWH
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LY6XPPDU\RI,QFRPH6WDWHPHQWV±%\)LQDQFLDO$FFRXQWLQJ6WDQGDUGVRI7DLZDQVWDQGDORQH
Year
2012
Items
2011
2010
1HW,QWHUHVW,QFRPH
5,038,683
4,758,441
4,457,763
1HW1RQLQWHUHVW,QFRPH
3,302,137
3,090,194
3,474,805
13/([SHQVHV
1,075,781
(69,766)
989,449
Operating Expenses
5,231,022
5,551,980
5,402,946
Before Tax Income (Loss) for Continuing Operations
2,034,017
2,366,421
1,540,173
After Tax Income (Loss) for Continuing Operations
1,731,260
1,978,861
884,269
0
0
0
1,731,260
1,978,861
884,269
0.79
0.91
0.41
&XPXODWLYH(IIHFWRI&KDQJHVLQ$FFRXQWLQJ3ULQFLSOH
1HWDPRXQW$IWHU7D[
1HWLQFRPHRUORVVIRUFXUUHQWSHULRG
Earnings per Share
1RWH$OO¿QDQFLDOVWDWHPHQWVLQUHFHQW¿YH\HDUVZHUHDXGLWHGE\WKH&3$7KH&RPSDQ\KDVDGRSWHG,)56IRU¿QDQFLDOVWDWHPHQWVVLQFH3OHDVHUHIHUWRWKH
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Year
,WHPV1RWH
2014
Loan / Deposit ratio (%)
2011
76.33
78.46
0.08
0.11
0.21
1.17
1.16
1.30
3.38
3.24
3.48
0.02
0.02
0.02
3,268
3,158
2,685
879
876
416
10.98
10.98
6.18
Returns on assets (%)
0.60
0.60
0.29
Returns on equity (ROE) (%)
8.09
8.80
4.67
26.89
27.74
15.48
1.04
1.15
0.58
92.44
92.79
93.52
Fixed assets / ROE (%)
9.17
10.23
11.08
Assets growth (%)
4.25
3UR¿WJURZWK
5.51
85.78
1$
637.95
26.48
30.59
29.96
2,630,927
2,328,444
2,256,279
0.86
0.81
0.75
0DUNHWVKDUHRIDVVHWV
1.20
1.16
1.23
0DUNHWVKDUHRIQHWZRUWK
1.13
1.13
1.13
0DUNHWVKDUHRIGHSRVLWV
1.09
1.15
1.21
0DUNHWVKDUHRIORDQV
1.17
1.13
1.26
,QWHUHVWH[SHQVHDYHUDJHRXWVWDQGLQJ
deposits ratio (%)
,QWHUHVWUHYHQXHDYHUDJHRXWVWDQGLQJ
loans ratio (%)
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5HYHQXHSHUHPSOR\HH
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2012
82.79
13/UDWLR
2SHUDWLQJ(I¿FLHQF\
2013
1HWSUR¿WUDWH
(DUQLQJVSHUVKDUH(3617
Liabilities / assets ratio (%)
2010
Financial Structure
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Secured loan balance of interested parties
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Business Scale
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Year
,WHPV1RWH
2014
2011
75.97
78.25
0.08
0.11
0.21
1.15
1.14
1.27
3.30
3.17
3.40
0.02
0.02
0.02
3,544
3,448
2,634
998
1,013
450
10.45
10.63
6.20
0.58
0.60
0.30
8.48
9.48
5.28
28.16
29.37
17.07
1.04
1.15
0.58
92.94
93.31
94.03
7.99
8.98
9.84
Assets growth (%)
4.64
3UR¿WJURZWK
3.63
79.40
1$
652.14
26.48
30.59
29.96
2,630,927
2,328,444
2,256,279
0.86
0.81
0.75
0DUNHWVKDUHRIDVVHWV
1.20
1.16
1.23
1.13
1.13
1.13
1.09
1.15
1.21
0DUNHWVKDUHRIORDQV
1.17
1.13
1.26
,QWHUHVWH[SHQVHDYHUDJHRXWVWDQGLQJ
deposits ratio (%)
,QWHUHVWUHYHQXHDYHUDJHRXWVWDQGLQJ
loans ratio (%)
5HYHQXHSHUHPSOR\HH
3UR¿WSHUHPSOR\HH
3UR¿WDELOLW\
2012
82.63
13/UDWLR
2SHUDWLQJ(I¿FLHQF\
2013
1HWSUR¿WUDWH
2010
Financial Structure
*URZWK5DWH
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133
accounting standards of Taiwan. As shown on the next page.
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3. Financial structure
(1) Liabilities / assets Ratio = total liabilities / total assets
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subtracting or adding after tax income/loss.
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4) real estate and equipment asset is referring to the total real estate and equipment asset before the deduction of accumulated depreciation
134
(3) Consolidated Financial Analysis – By Financial Accounting Standards of Taiwan
Year
,WHPV1RWH
2012
2SHUDWLQJ(I¿FLHQF\
2011
2010
78.46
76.45
82.02
13/UDWLR
0.21
0.46
0.55
,QWHUHVWH[SHQVHDYHUDJHRXWVWDQGLQJGHSRVLWVUDWLR
1.28
1.18
0.95
,QWHUHVWUHYHQXHDYHUDJHRXWVWDQGLQJORDQVUDWLR
3.54
3.38
3.15
0.02
0.02
0.02
2,784
2,427
2,314
526
539
250
7.52
9.13
6.14
0.37
0.43
0.24
5.78
6.80
3.61
18.90
22.19
10.81
0.79
0.91
0.41
93.31
93.86
93.48
9.66
10.37
12.80
(3.03)
12.46
9.37
(12.99)
48.31
53.73
(1.91)
5.71
(3.32)
171.61
2,399.31
1,364.82
(8.15)
(7.92)
7.11
29.96
30.70
27.17
2,256,279
2,228,406
3,106,708
0.75
0.72
1.07
0DUNHWVKDUHRIDVVHWV
1.23
1.33
1.26
1.13
1.18
1.16
1.21
1.35
1.21
0DUNHWVKDUHRIORDQV
1.26
1.32
1.31
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Financial Structure
Assets growth (%)
*URZWK5DWH
3UR¿WJURZWK
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Business Scale
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before tax.
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135
(4) Standalone Financial Analysis – By Financial Accounting Standards of Taiwan
Year
,WHPV1RWH
2012
2SHUDWLQJ(I¿FLHQF\
2011
2010
78.25
76.23
81.76
13/UDWLR
0.21
0.46
0.55
,QWHUHVWH[SHQVHDYHUDJHRXWVWDQGLQJGHSRVLWVUDWLR
1.20
1.16
0.93
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3.37
3.28
3.05
0.02
0.02
0.02
2,739
2,577
2,568
568
650
286
7.53
9.26
6.01
0.38
0.46
0.23
6.51
7.93
3.72
20.76
25.21
11.15
0.79
0.91
0.41
93.83
94.38
94.08
9.53
10.31
13.32
(3.22)
12.93
8.98
(14.05)
53.65
154.33
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(1.90)
4.91
(2.10)
43.22
3,308.74
1,456.77
(6.96)
(6.25)
4.30
29.96
30.70
27.17
2,256,279
2,228,406
3,106,708
0.75
0.72
1.07
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1.23
1.33
1.26
1.13
1.18
1.16
1.21
1.35
1.21
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1.26
1.32
1.31
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before tax.
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7. Business scale
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0DUNHWVKDUHRIGHSRVLW WRWDOGHSRVLWVWRWDOGHSRVLWVRI¿QDQFLDOLQVWLWXWLRQVFDSDEOHRIXQGHUWDNLQJGHSRVLWORDQEXVLQHVV
0DUNHWVKDUHRIORDQ WRWDOORDQVWRWDOORDQVRI¿QDQFLDOLQVWLWXWLRQVFDSDEOHRIXQGHUWDNLQJGHSRVLWORDQEXVLQHVV
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7KHFDOFXODWLRQVWDQGDUGLVEDVHGRQWKHZHLJKWHGDYHUDJHRUGLQDU\VKDUHVYROXPHQRWEDVHGRQWKHQXPEHURIRXWVWDQGLQJVKDUHDWWKHHQGRIWKH\HDU
,IWKHUHZDVRFFXUUHQFHRIFDSLWDOLQFUHDVHE\FDVKRUWUDQVDFWLRQRIWUHDVXU\VWRFNZHLJKWHGDYHUDJHQXPEHURIVKDUHVGXULQJFLUFXODWLRQSHULRGVKDOOEH
considered.
,IWKHUHZDVFDSLWDOLQFUHDVHWKURXJKFDSLWDOL]DWLRQRIUHWDLQHGHDUQLQJVRUFDSLWDOLQFUHDVHWKURXJKFDSLWDOL]DWLRQRIFDSLWDOUHVHUYHZKHQFDOFXODWLQJWKH
HDUQLQJSHUVKDUHRIWKH\HDURUKDOI\HDUDGMXVWPHQWVKDOOEHPDGHLQDFFRUGDQFHZLWKWKHFDSLWDOLQFUHDVHSURSRUWLRQ
,IWKHSUHIHUUHGVKDUHVDUHQRQFRQYHUWLEOHFXPXODWLYHSUHIHUUHGVKDUHVLWVGLYLGHQGVZKHWKHULVVXHGRUQRWFDOFXODWLRQVKDOOFRYHUDIWHUWD[QHWLQFRPH
subtracting or adding after tax income/loss.
,IWKHSUHIHUUHGVKDUHVDUHQRQFXPXODWLYHZKHQWKHUHLVDIWHUWD[QHWLQFRPHSUHIHUUHGVKDUHV¶GLYLGHQGVVKDOOEHGHGXFWHGIURPDIWHUWD[LQFRPHLQWKH
HYHQWRIDORVVQRDGMXVWPHQWLVQHFHVVDU\
1RWH)LQDQFLDOLQVWLWXWLRQVFDSDEOHRIXQGHUWDNLQJGHSRVLWORDQEXVLQHVVLQFOXGHG'RPHVWLF%DQNV/RFDO%UDQFKHVRI)RUHLJQ%DQNV&UHGLW&RRSHUDWLYHV&UHGLW
'HSDUWPHQWVRI)DUPHU
VDQG)LVKHUPHQ
V$VVRFLDWLRQVDQG7UXVWDQG,QYHVWPHQW&RPSDQLHV
1RWH7RWDOUHYHQXHLVWKHVXPRILQWHUHVWDQGQRQLQWHUHVWLQFRPH
1RWH7KHIROORZLQJIDFWRUVQHHGWREHFRQVLGHUHGZKHQDQDO\]LQJWKHFDVKÀRZ
QHWFDVKÀRZIURPRSHUDWLRQDODFWLYLWLHVLVWKHDPRXQWRILQÀRZRIFDVKÀRZIURPRSHUDWLQJDFWLYLWLHVVKRZQRQWKHFDVKÀRZVWDWHPHQW
FDSLWDOH[SHQGLWXUHUHIHUVWRWKHDQQXDOFDVKRXWÀRZIRUFDSLWDOLQYHVWPHQW
FDVKGLYLGHQGLQFOXGHWKHFDVKGLYLGHQGWRFRPPRQDQGSUHIHUUHGVKDUHKROGHUV
JURVV¿[HGDVVHWLVUHIHUULQJWRWKHWRWDO¿[HGDVVHWEHIRUHWKHGHGXFWLRQRIDFFXPXODWHGGHSUHFLDWLRQ
137
(5) Capital Adequacy Ratio 1(standalone)
<HDU1RWH
&DSLWDO$GHTXDF\5DWLRLQUHFHQW¿YH\HDUV1RWH
2014
2013
Item
Common Stock
27,044,967
24,070,087
additional Tier 1 capital
3,969,364
4,531,687
Tier 2 Capital
9,331,209
6,724,663
Equity capital
40,345,540
35,326,437
325,288,794
284,592,067
0
0
1,602,534
1,525,930
16,447,135
14,582,542
6WDQGDUGL]HGDSSURDFK$OWHUQDWLYH
standardized approach
0
0
$GYDQFHGPHDVXUHPHQWDSSURDFK
0
0
Standardized approach
3,907,826
5,962,592
Internal models method
0
0
347,246,289
306,663,131
11.62
11.52
5DWLRRIWLHUFDSLWDOWRULVNZHLJKWHGDVVHWV
8.93
9.33
5DWLRRIFRPPRQVWRFNKROGHUV¶HTXLW\WRULVNZHLJKWHGDVVHWV
7.79
7.85
The capital
adequacy
ratio up
to (date/
month/
year) of
this year
1RWH
Eligible capital
Credit risk
Internal ratings based approach
Synthetic securitization
Basic indicator approach
5LVNZHLJKWHGDVVHWV
Operational risk
0DUNHWULVN
5LVNZHLJKWHGDVVHWV
Capital adequacy ratio
5DWLRRIOHYHUDJH1RWH
3OHDVHH[SODLQWKHUHDVRQIRUWKHFKDQJHLQFDSLWDODGHTXDF\UDWLRLQUHFHQWWZR\HDUV,IWKHPDUNHWÀXFWXDWLRQLVOHVVWKDQWKHH[SODQDWLRQFDQEH
omitted )
The change in capital adequacy ratio in recent two years is less than 20%.
＊ ,IWKHFRPSDQ\DOVRSURYLGHVVWDQGDORQH¿QDQFLDOVWDWHPHQWVLWVKDOOSURYLGHWKH&DSLWDO$GHTXDF\5DWLRVWDQGDORQHVHSDUDWHO\
1RWHV：
7KHLQIRUPDWLRQRID\HDUZKLFKLVQRWEDVHGRQWKH&3$DSSURYHGFRQVROLGDWHG¿QDQFLDOVWDWHPHQWVVKRXOGEHFOHDUO\VSHFL¿HG
(OLJLEOHFDSLWDOULVNZHLJKWHGDVVHWVDQGWRWDOULVNH[SRVXUHDUHFDOFXODWHGXQGHUWKH³5HJXODWLRQV*RYHUQLQJWKH&DSLWDO$GHTXDF\DQG&DSLWDO&DWHJRULHVRI
%DQNV´DQG³([SODQDWLRQRI0HWKRGVIRU&DOFXODWLQJWKH(OLJLEOH&DSLWDODQG5LVN:HLJKWHG$VVHWVRI%DQNV´
3.Formulas used were as follows:
(OLJLEOHFDSLWDO &RPPRQ6WRFNDGGLWLRQDO7LHUFDSLWDO7LHU&DSLWDO
5LVNZHLJKWHGDVVHWV 5LVNZHLJKWHGDVVHWIRUFUHGLWULVN&DSLWDOUHTXLUHPHQWVIRURSHUDWLRQDOULVNDQGPDUNHWULVN[
&DSLWDODGHTXDF\UDWLR (OLJLEOHFDSLWDO·5LVNZHLJKWHGDVVHWV
5DWLRRIWLHUFDSLWDOWRULVNZHLJKWHGDVVHWV &RPPRQ6WRFNDGGLWLRQDO7LHUFDSLWDO·5LVNZHLJKWHGDVVHWV
5DWLRRI&RPPRQ6WRFNWRULVNZHLJKWHGDVVHWV &RPPRQ6WRFN·5LVNZHLJKWHGDVVHWV
5DWLRRIOHYHUDJH 7LHUFDSLWDO·7RWDOULVNH[SRVXUH
)RUFRPSDQLHVZKRVHVWRFNLVOLVWHGRQWKH6WRFN([FKDQJHRUWUDGHGRYHUWKHFRXQWHUWKH¿QDQFLDOLQIRUPDWLRQVKDOOEHSUHSDUHGXSWRWKHSHULRGDVRIWKH
TXDUWHUSUHFHGLQJWKHGDWHRISXEOLVKLQJRIWKHDQQXDOUHSRUW,WVKDOOEHVSHFL¿HGWKDWLIWKH¿QDQFLDOVWDWHPHQWVZHUHDSSURYHGUHYLHZHGE\&3$RUQHLWKHURI
the aforesaid.
7KHOHYHUDJHUDWLRVKDOOEHGLVFORVHGDVRI
138
(6) Capital Adequacy Ratio 1(consolidated)
<HDU1RWH
2014
2013
Item
Common Stock
27,044,967
24,070,087
additional Tier 1 capital
3,969,364
4,531,687
Tier 2 Capital
9,331,209
6,724,663
Equity capital
40,345,540
35,326,437
325,288,794
284,592,067
0
0
1,602,534
1,525,930
16,447,135
14,582,542
0
0
0
0
3,907,826
5,962,592
0
0
347,246,289
306,663,131
11.62
11.52
8.93
9.33
5DWLRRIFRPPRQVWRFNKROGHUV¶HTXLW\WRULVNZHLJKWHGDVVHWV
7.79
7.85
The capital
adequacy
ratio up
to (date/
month/
year) of
this year
1RWH
Eligible capital
Credit risk
5LVNZHLJKWHGDVVHWV
Operational risk
0DUNHWULVN
5LVNZHLJKWHGDVVHWV
5DWLRRIOHYHUDJH1RWH
3OHDVHH[SODLQWKHUHDVRQIRUWKHFKDQJHLQFDSLWDODGHTXDF\UDWLRLQUHFHQWWZR\HDUV,IWKHPDUNHWÀXFWXDWLRQLVOHVVWKDQWKHH[SODQDWLRQFDQEH
omitted )
The change in capital adequacy ratio in recent two years is less than 20%
＊ ,IWKHFRPSDQ\DOVRSURYLGHVVWDQGDORQH¿QDQFLDOVWDWHPHQWVLWVKDOOSUHSDUHWKH&DSLWDO$GHTXDF\5DWLRVWDQGDORQHVHSDUDWHO\
1RWHV：
7KHLQIRUPDWLRQRID\HDUZKLFKLVQRWUHYLHZHGE\&3$VKDOOEHFOHDUO\VSHFL¿HG
(OLJLEOHFDSLWDOULVNZHLJKWHGDVVHWVDQGWRWDOULVNH[SRVXUHDUHFDOFXODWHGXQGHUWKH³5HJXODWLRQV*RYHUQLQJWKH&DSLWDO$GHTXDF\DQG&DSLWDO&DWHJRULHVRI
%DQNV´DQG³([SODQDWLRQRI0HWKRGVIRU&DOFXODWLQJWKH(OLJLEOH&DSLWDODQG5LVN:HLJKWHG$VVHWVRI%DQNV´
(OLJLEOHFDSLWDO &RPPRQ6WRFNDGGLWLRQDO7LHUFDSLWDO7LHU&DSLWDO
5DWLRRIWLHUFDSLWDOWRULVNZHLJKWHGDVVHWV &RPPRQ6WRFNDGGLWLRQDO7LHUFDSLWDO·5LVNZHLJKWHGDVVHWV
5DWLRRI&RPPRQ6WRFNWRULVNZHLJKWHGDVVHWV &RPPRQ6WRFN·5LVNZHLJKWHGDVVHWV
5DWLRRIOHYHUDJH 7LHUFDSLWDO·7RWDOULVNH[SRVXUH
TXDUWHUSUHFHGLQJWKHGDWHRISULQWLQJRIWKHDQQXDOUHSRUW,WVKDOOEHVSHFL¿HGWKDWLIWKH¿QDQFLDOVWDWHPHQWVZHUHDSSURYHGUHYLHZHGE\&3$RUQHLWKHURIWKH
aforesaid.
7KHOHYHUDJHUDWLRVKDOOEHGLVFORVHGDVRI
139
(7) Capital Adequacy Ratio 2(standalone)
<HDU1RWH
2012
2011
2010
Item
Common stockholder's equity
22,477,734
21,834,693
21,834,693
QRQFXPXODWLYHSHUSHWXDOSUHIHUUHG
stock
1,882,353
1,882,353
1,882,353
1 R Q F X P X O D W L Y H S H U S H W X D O
subordinated debts
2,110,000
2,110,000
2,000,942
0
0
0
1,731,919
1,742,646
1,667,938
6WDWXWRU\VXUSOXVUHVHUYHV
469,302
0
0
6SHFLDOUHVHUYHV
342,763
61,313
0
1,784,938
1,479,271
(249,795)
0
0
0
(1,118,740)
(878,206)
(495,500)
Deducting: goodwill
0
0
0
Deducting: the unamortized loss
RQ WKH GLVSRVDO RI QRQSHUIRUPLQJ
loans
0
0
0
1,765,308
2,154,470
1,646,691
27,914,961
26,077,600
24,993,940
perpetual preferred stocks
0
0
0
FXPXODWLYH SHUSHWXDO VXERUGLQDWHG
debts
0
0
0
YDOXHDSSUHFLDWLRQRI¿[HGDVVHWV
0
0
0
138,219
63,279
63,613
FRQYHUWLEOHERQGV
0
0
0
RSHUDWLRQ UHVHUYHV DQG ORDQ ORVV
SURYLVLRQV
0
0
0
9,600,000
7,200,000
5,700,000
0
0
0
&DSLWDOFROOHFWHGLQDGYDQFH
FDSLWDO UHVHUYHV H[FHSW WKH YDOXH
DSSUHFLDWLRQRI¿[HGDVVHWV
tier 1 capital
$FFXPXODWHGSUR¿WRUORVV
0LQRULW\LQWHUHVW
6WRFNKROGHUV
(TXLWLHV$GMXVWPHQWV
Eligible capital
Deducting: capital deduction items
Total tier 1 capital
tier 2 capital
R I 8 Q U H D O L ] H G * D L Q V R Q
ORQJWHUPVXERUGLQDWHGGHEW
1RQSHUSHWXDOSUHIHUUHGVWRFN
140
The capital
adequacy
ratio up
to (date/
month/
year) of
this year
1RWH
<HDU1RWH
2012
2011
2010
Item
7KHWRWDODPRXQWRIQRQFXPXODWLYH
SHUSHWXDOSUHIHUUHGVWRFNDQGQRQ
debts are exceeding 15% of Tier 1
Capital
0
0
109,058
939,917
891,814
1,149,839
8,798,302
6,371,465
4,722,832
6KRUWWHUPVXERUGLQDWHGGHEW
0
0
0
0
0
0
0
0
0
36,713,263
32,449,065
29,716,772
278,855,760
279,039,148
245,912,605
0
0
0
1,457,592
1,700,880
0
13,235,754
13,059,124
14,154,226
0
0
0
0
0
0
9,031,449
7,003,929
8,420,138
0
0
0
302,580,555
300,803,081
268,486,969
12.13
10.79
11.07
9.23
8.67
9.31
2.90
2.12
1.76
0.00
0.00
0.00
5DWLRRIFRPPRQVWRFNKROGHUV¶HTXLW\WRWRWDODVVHWV
5.06
4.75
5.37
tier 2 capital
Eligible capital
tier 3 capital
Eligible capital
Credit risk
The capital
adequacy
ratio up
to (date/
month/
year) of
this year
1RWH
5LVN
weighted assets
Operational risk
0DUNHWULVN
5LVNZHLJKWHGDVVHWV
141
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1RWHV：
(OLJLEOHFDSLWDOULVNZHLJKWHGDVVHWVDUHFDOFXODWHGXQGHUWKH³5HJXODWLRQV*RYHUQLQJWKH&DSLWDO$GHTXDF\DQG&DSLWDO&DWHJRULHVRI%DQNV´DQG³([SODQDWLRQRI
0HWKRGVIRU&DOFXODWLQJWKH(OLJLEOH&DSLWDODQG5LVN:HLJKWHG$VVHWVRI%DQNV´
,QWKHHYHQWWKDWWKHFUHGLWULVNZDVFDOFXODWHGE\WKHFRPSDQ\LQDFFRUGDQFHZLWKWKHWUDQVLWLRQDOUHJXODWLRQVSOHDVH¿OOLQWKHULVNZHLJKWHGDVVHWVEDVHGRQ
standardized credit risk approach.
(OLJLEOHFDSLWDO 7LHUFDSLWDO7LHU&DSLWDO7LHUFDSLWDO
5DWLRRIWLHUFDSLWDOWRULVNZHLJKWHGDVVHWV 7LHUFDSLWDO·5LVNZHLJKWHGDVVHWV
7)Ratio of Common Stock to total assets = Common Stock÷ total assets.
aforesaid.
142
(8) Capital Adequacy Ratio 2(Consolidated)
<HDU1RWH
2012
2011
2011
Item
Common stockholder's equity
22,477,734
21,834,693
21,834,693
QRQFXPXODWLYHSHUSHWXDOSUHIHUUHG
stock
1,882,353
1,882,353
1,882,353
1 R Q F X P X O D W L Y H S H U S H W X D O
subordinated debts
2,110,000
2,110,000
2,000,942
0
0
0
1,731,919
1,742,646
1,667,938
6WDWXWRU\VXUSOXVUHVHUYHV
469,302
0
0
6SHFLDOUHVHUYHV
342,763
61,313
0
1,784,938
1,479,271
(249,795)
0
0
0
(1,118,740)
(878,206)
(495,500)
Deducting: goodwill
0
0
0
Deducting: the unamortized loss
RQ WKH GLVSRVDO RI QRQSHUIRUPLQJ
loans
0
0
0
1,765,308
2,154,470
1,646,691
27,914,961
26,077,600
24,993,940
perpetual preferred stocks
0
0
0
debts
0
0
0
YDOXHDSSUHFLDWLRQRI¿[HGDVVHWV
0
0
0
138,219
63,279
63,613
FRQYHUWLEOHERQGV
0
0
0
RSHUDWLRQ UHVHUYHV DQG ORDQ ORVV
SURYLVLRQV
0
0
0
9,600,000
7,200,000
5,700,000
0
0
0
&DSLWDOFROOHFWHGLQDGYDQFH
FDSLWDO UHVHUYHV H[FHSW WKH YDOXH
DSSUHFLDWLRQRI¿[HGDVVHWV
tier 1 capital
$FFXPXODWHGSUR¿WRUORVV
0LQRULW\LQWHUHVW
6WRFNKROGHUV
(TXLWLHV$GMXVWPHQWV
Eligible capital
tier 2 capital
R I 8 Q U H D O L ] H G * D L Q V R Q
ORQJWHUPVXERUGLQDWHGGHEW
The capital
adequacy
ratio up
to (date/
month/
year) of
this year
1RWH
143
<HDU1RWH
2012
2011
2010
Item
7KHWRWDODPRXQWRIQRQFXPXODWLYH
SHUSHWXDOSUHIHUUHGVWRFNDQGQRQ
debts are exceeding 15% of Tier 1
Capital
0
0
109,058
939,917
891,814
1,149,839
8,798,302
6,371,465
4,722,832
6KRUWWHUPVXERUGLQDWHGGHEW
0
0
0
0
0
0
0
0
0
36,713,263
32,449,065
29,716,772
278,855,760
279,039,148
245,912,605
0
0
0
1,457,592
1,700,880
0
13,235,754
13,059,124
14,154,226
0
0
0
0
0
0
9,031,449
7,003,929
8,420,138
0
0
0
302,580,555
300,803,081
268,486,969
12.13
10.79
11.07
9.23
8.67
9.31
2.90
2.12
1.76
0.00
0.00
0.00
5DWLRRIFRPPRQVWRFNKROGHUV¶HTXLW\WRWRWDODVVHWV
5.06
4.75
5.37
tier 2 capital
Eligible capital
tier 3 capital
Eligible capital
Credit risk
5LVN
weighted assets
Operational risk
0DUNHWULVN
5LVNZHLJKWHGDVVHWV
144
The capital
adequacy
ratio up
to (date/
month/
year) of
this year
1RWH
＊ ,IWKHFRPSDQ\DOVRSURYLGHVFRQVROLGDWHG¿QDQFLDOVWDWHPHQWVLWVKDOOGLVFORVHWKH&DSLWDO$GHTXDF\5DWLRFRQVROLGDWHGWRJHWKHU
1RWHV：
(OLJLEOHFDSLWDOULVNZHLJKWHGDVVHWVDUHFDOFXODWHGXQGHUWKH³5HJXODWLRQV*RYHUQLQJWKH&DSLWDO$GHTXDF\DQG&DSLWDO&DWHJRULHVRI%DQNV´DQG³([SODQDWLRQRI
0HWKRGVIRU&DOFXODWLQJWKH(OLJLEOH&DSLWDODQG5LVN:HLJKWHG$VVHWVRI%DQNV´
,QWKHHYHQWWKDWWKHFUHGLWULVNZDVFDOFXODWHGE\WKHFRPSDQ\LQDFFRUGDQFHZLWKWKHWUDQVLWLRQDOUHJXODWLRQVSOHDVH¿OOLQWKHULVNZHLJKWHGDVVHWVEDVHGRQ
standardized credit risk approach.
(OLJLEOHFDSLWDO 7LHUFDSLWDO7LHU&DSLWDO7LHUFDSLWDO
7)Ratio of Common Stock to total assets = Common Stock÷ total assets.
aforesaid.
145
3. Supervisors' Auditing Report for Financial Statements for the Year 2014
Supervisors' Auditing Report
:H KDYH UHYLHZHG WKH VWDQGDORQH DQG FRQVROLGDWHG EDODQFH VKHHWV LQFRPH VWDWHPHQWV VWDWHPHQWV RI VWRFNKROGHUV
equity, and cash flow statements of Ta Chong Bank for the year 2014, which were prepared by the Board of Directors
DQGDXGLWHGDQGFHUWLILHGE\'HORLWWH7RXFKH:HIRXQGQRGLVFUHSDQF\DQGKHUHE\LVVXHWKLVUHSRUWLQFRPSOLDQFHZLWK
Article 219 of the Company Act.
6XSHUYLVRU%2:(,/LPLWHG&RPSDQ\
5HSUHVHQWDWLYH6XH+R
6XSHUYLVRU4LQ<XQ,QYHVWPHQW&R/WG
5HSUHVHQWDWLYH7KRPDV/HH
0DUFK
146
4. The Financial Report for the year 2014
Please refer to Appendix 1 of the Annual Report.
5. Standalone Banking Financial Report for the year 2014 as audited by the CPA
Please refer to Appendix 2 of the Annual Report.
6. The impact of the Company or its affiliates experiencing financial difficulties on the financial
situation of the Company
1RQH
147
VII
Financial Highlights and Analysis of
Operational Results and Risk Management
1. Financial Highlights (Consolidated)
Variance
Year
2014
Item
2013
Amount
%
Total Assets
472,647,379
453,377,585
19,269,794
4
Total Liabilities
436,895,922
420,694,262
16,201,660
4
35,751,457
32,683,323
3,068,134
9
Total Stockholders’ Equity
Explanation required for variance of 20% or more and an amount exceeding NT$10 Million: None
2. Analysis of Operating Results (Consolidated)
Year
2014
Item
Interest Income
$
Increase
(Decrease)
2013
9,483,766
$
8,832,701
$
Variance Ratio
(%)
651,065
7
Interest Expense
4,097,623
4,053,714
43,909
1
Net Interest Income
5,386,143
4,778,987
607,156
13
Net Non-Interest Income
4,905,247
5,095,323
190,076)
(4)
10,291,390
9,874,310
417,080
4
481,951
721,177
239,226)
(33)
Operating Expenses
6,536,981
6,051,661
485,320
8
Net Income (Loss) Before Tax
3,272,458
3,101,472
170,986
6
505,519
362,376
143,143
40
2,766,939
2,739,096
27,843
1
56,534
102,531
(
46,078)
(45)
($
18,235)
(1)
Net Income
NPL expenses and provision expenses
Income tax expenses
Net Income (Loss) for the current
time period
Other P&L for the current time
period
Total P&L for the current time period
$
2,823,392
$
2,841,627
(
(
Analysis of Changes in Increase and Decrease:
1.Compared to 2013, NPL expenses and provision expenses in 2014 have decreased, mainly due to the qualities of loans and good recoveries of bad
debts, making the NPL reserve less than that of 2013.
2.Compared with 2013, income tax expense of 2014 has increased, mainly due to the increase of OBU incomes, bringing a concurrent increase in income
tax.
&RPSDUHGZLWKRWKHU3/RIKDVGHFUHDVHGPDLQO\GXHWRWKHGHFUHDVHRIXQUHDOL]HGJDLQVRI¿QDQFLDODVVHWVWKDWDUHDYDLODEOHIRUVDOH
149
VII Financial Highlights and Analysis of Operational Results and Risk Management
3.CashFlow (Consolidated):
&DVKÀRZFKDQJHVLQWKHODWHVWWZR\HDUV
Year
2014
(%)
Item
Cash Flow Ratio
(
Cash Flow Adequacy Ratio
( 2,818.58 )
Cash Flows Satisfaction Ratio
2013
(%)
27.83 )
(
Increase (Decrease)
(%)
2.23 )
(
( 2,460.87 )
637.95
(
25.60 )
( 357.71 )
24.87 )
662.82
Analysis and Explanation for the Changes in Ratio:
&RPSDULQJZLWKFDVKÀRZUDWLRDQGFDVKÀRZDGHTXDF\UDWLRGHFUHDVHGLQPDLQO\GXHWRWKHLQFUHDVHRIGLVFRXQWDQGORDQZKLFK
UHVXOWVLQDQRXWÀRZRIRSHUDWLRQDODFWLYLWLHVQHWFDVK
&DVKÀRZVDWLVIDFWLRQUDWLRRILVSRVLWLYHPDLQO\EHFDXVHWKHRSHUDWLRQDODQGLQYHVWPHQWDFWLYLWLHVFDXVHGE\WKHRXWÀRZRIQHWFDVK1HW
cash provided by operational activities is mainly due to the increase of discount and loan, and net cash provided by investment activities is mainly
due to the acquisition of bonds investments with no active market.
(2) Forecast Analysis of Liquidity in 2015:
Starting Cash
Balance
Expected Net Cash
Flows of Operational
activities Over the
Year
Expected Cash
2XWÀRZV
Over the Year
Expected Cash
Balance
(Shortage)
$ 15,467,234
6,821,287
19,370,455
2,918,066
Estimated Remedies and Measures for
Cash Shortage
Investment Plan
$
Financing Plan
-
$
-
2015 Cash Flow Variation Analysis:
1. Operational activities: Mainly due to an increase of interest income and service fee income. However, the subsidiary, TCSC, expects to increase the
¿QDQFLQJEXVLQHVVOHDGLQJWRDQRXWÀRZRIFDVKIURPVHOIRSHUDWHGEXVLQHVV
2. Investment Activities: Mainly due to the increase of discount and liquidity reserves of banking book.
3. Financing Activities: Mainly due to the increase of the deposit business.
4. The Influence of Material Capital Expenditure on Financial Business:
(1) Utilization of material capital expenditure and fund source: None
(2) Expected benefits: None
7KHUHLQYHVWPHQWSROLFLHVPDMRUUHDVRQVIRUSUR¿WRUORVVLPSURYHPHQWSODQVDQGDQ\RWKHU
investment plans in recent one year:
(1) As of the end of Dec 2014, there are 13 re-invested companies for long-term re-investment as follows (categorized by the
purpose of re-investments):
i. To align with core business need: such as “Ta Chong Leasing”, “Ta Chong Securities”. “Ta Chong Life Insurance
$JHQF\´³7D&KRQJ*HQHUDO,QVXUDQFH$JHQF\´DQG³7D&KRQJ)LQDQFH&RPSDQ\+.´$WRWDORI¿YHUHLQYHVWHG
companies.
ii. To be in line with governmental policies: such as “Taipei FX”, “Taiwan Futures Exchange”, “Financial Information
6HUYLFHV&R/WG´³$VVHW0DQDJHPHQW&RPSDQ\´³7DLZDQ0RELOH3D\PHQW&RUSRUDWLRQ´$WRWDORI¿YHFRPSDQLHV
iii. Others: “Taiwan-Ham”, “Hua-Jing Venture Capital”and“Lian-Bao Venture Capital.” A total of three companies.
(2)Reinvestment policies of the Bank follow the principles of alignment with bank-wide policies, risk diversification
and enhancing allocation of capital. The current reinvestment businesses focus mostly on those related to the core
business of the financial industry. Each year, the Bank evaluates the performance and risks of each investment
project. For companies that have incurred losses, the Bank will closely pay attention to its management. Profits of
150
reinvestment projects came from cash dividends of the invested companies based on Method of Costs, as well as
the recognized investment yield calculated by Method of Equity in accordance with the share of equity held by Ta
Chong Bank.In 2014, the loss mainly came from Ta Chong Finance Company (HK). Ta Chong Finance Company
(HK) has completed its objective, which was centralization of business and internal control. The Bank made the
announcement in May 2014 to dissolve such company and in January 2015 published the official dissolution notice
via Government of the Hong Kong Special Administrative Region.
(3)In 2015, the Bank’s investment plan shall be strategized in accordance with overall economic conditions and the
Bank’s business strategy.
6. Risk Management
(1) Qualitative and quantitative information of different risk types
A. Risk management system and capital requirement
(a)Credit risk management system
2014
Disclosure Items
Contents
1. Strategies, goals, policies and
procedures of credit risk.
(1) Goals of Credit Risk Management
%DVHGRQWKHULVNVWUDWHJLHVDSSURYHGE\WKH%RDUGRI'LUHFWRUVZHVHHNWRPD[LPL]HSUR¿WVDQGHTXLW\
value for shareholders through appropriate risk management policies and procedures to keep bank-wide
risks under acceptable benchmark.
(2) Strategies of Credit Risk Management
In line with risk appetite and sales target approved by the Board of Directors, we stipulated the limits for all
types of risks among all BUs as the bases for various products and portfolio.
(3) Policies & Procedures of Credit Risk Management
A.Continue to exercise the optimal management approaches on loan asset portfolio and promote capital/
revenue by risk pricing. Roll out appropriate NPL provision and effectively lower the risks of centralized
portfolio.
%%XLOG DQ LQGHSHQGHQW ULVN DVVHVVPHQW PHFKDQLVP DQG LPSOHPHQW ULVN LGHQWL¿FDWLRQ DQG PHDVXUHPHQW
before and after loan approval to monitor asset quality.
C.Enhance the capabilities of quantifying risk management, such as improving the model for credit
HYDOXDWLRQRIZKROHVDOHEDQNLQJDQGWKHDFFXUDF\RISHUVRQDOVFRUHFDUGVRIUHWDLOEDQNLQJWR¿QHWXQH
skills of quantifying risk management and reduce risks.
D.Strengthen the principle of diversifying credit risks and evaluate the risk exposure as well as variation
trend of asset portfolio. Such evaluation would be reported to senior managers, Board Risk Committee
(BRC) or Board of Directors to adjust our risk positions in a timely manner when necessary.
151
Disclosure Items
2. Organization and structure of
credit risk management
Contents
The Board of Directors
The Board of Directors situates on the highest decision-making level of the Bank and is the ultimate responsible
unit for risk management. The Board of Directors is entitled to review and approve the strategies and policies
of risk management regarding the elements of business environment and bank-wide status quo to build up a
culture of risk management in the Bank and solidify quality of risk control.
Risk Management Committee
Risk Management Committee is responsible for evaluating and supervising the Bank's risk level, current risks
and compliance with risk procedures. Based on bank-wide business strategies, the Risk Management Committee should deliberate and promulgate risk policies while at the same time supervise and assess the implePHQWDWLRQUHVXOWVRIULVNFRQWURO7KH5LVN0DQDJHPHQW&RPPLWWHHLVDOVRHQWLWOHGWR¿OHDUHSRUWDQGVXEPLW
UHFRPPHQGDWLRQVWRWKH%RDUGRI'LUHFWRUVDIWHUUHYLHZLQJWKHFODVVL¿FDWLRQVWDQGDUGVRIULVNDVVHWVDQG13/
provision policies for the Board of Directors to review and approve.
Executive Committee (Credit Review Team)
The Executive Committee is in charge of reviewing and approving major loan applications delegated by the
Board of Directors and report to the Board of Directors for acknowledgement.
Risk Management Group
The Risk Management Group, covering Wholesale Banking Risk Management Division, Retail Banking Risk
Management Division, Risk Management Division and Collection Division, is responsible for identifying, measuring, communicating and supervising the Bank's credit risks. Its accountability and duties include:
(1) Wholesale Banking Risk Management Division:
To manage underwriting of wholesale banking loans; to draft credit strategy & goals of asset portfolio; to set
up risk limit; to regularly review & manage limits; to monitor asset quality and provide credit analysis; to plan
and carry out credit review affairs.
(2) Retail Banking Risk Management Division:
To discuss and stipulate bank-wide retail banking loan strategies and goals of loan asset portfolio; to amend/
add related procedures of products; to be responsible for credit approval, credit checking, verification
and post loan review; to supervise asset quality, provide related information & analysis of portfolio review
regularly and report the management updates of risk caps.
(3) Risk Management Division:
To control the trading risks & loss limit of issuers and counterparties; to manage the credit risk weights for
derivatives; to calculate the risk-weighted assets and to conduct bank-wide stress tests.
(4) Collection Division:
Responsible for the management of NPL, as well as collection and related litigation affairs.
3. Scope and Features of Credit
Risk Reports and Measurement
Systems
152
(1) Scope and Features of Credit Risk Management Reports:
Produce monthly reports required by law and asset portfolio to monitor the variation trend of risk assets to
submit to Planning and Analysis Department for consolidation and analysis. Report to the general manager
and senior managers for their reference on adjustment for bank-wide risk strategies, policies and target
markets.
(2) Scope and Features of Credit Risk Measurement Systems
A. Internal Rating System
Wholesale banking assesses rating for loan risks and credit limit based on "Ta Chong Bank's Rating
Policies for Wholesale Banking", in order to survey variation of risk and adjust one's rating level.
Retail banking makes evaluation via score cards of related products based on different product types.
Conducting monitor model and validation through an individual risk management department, to ensure
HI¿FLHQF\DQGDFFXUDF\RIULVNHYDOXDWLRQ
B. Concentration Management
To avoid concentration of credit risks, the Bank focus on the control of credit risks. Besides the
regulation on loan limits, the Bank also stipulates credit cap for the same person or the same interested
person(individual and corporation) transaction, different industries, business corporations, countries,stock
secured credit loan and some particular products. We also supervise all types of credit loans and the
concentration status of risk exposure.
C. Stress Test
To effectively manage possible changes to asset quality and establish warning mechanism of credit
risks, stress tests on loan asset portfolio and individual cases shall be rolled out (at least twice a year)
to detect all possible changes and preemptive prevention measures shall be adopted. Results of stress
tests are regularly reported to senior managers, BRC, or Board of Directors, to ensure implementation
appropriateness and bank-wide risk is under control.
Disclosure Items
Contents
4. Risk Hedging or Risk Elimination
Policy and Strategies & Proce
dures of Effective Instruments to
Elude/Mitigate Risks.
(1) Collateral Management
The Bank has formulated related management policies for the types of collaterals, loan-to-value ratio,
appraisal approaches, frequency of re-appraisal or MTM evaluation, and coverage ratio of collaterals to
ensure the effectiveness of risk mitigation.
(2) Risk Mitigation of Derivative Transactions
The Bank requests for a margining for derivative transactions, or other approaches such as netting
agreement or early termination of contracts to lower the Bank's exposure.
(3) External Guarantee
For some SME clients with weak credit rating or lacking collateral, the Bank may obtain credit guarantee
supported by Small and Medium Enterprise Credit Guarantee Fund of Taiwan (Taiwan SMEG), for creditors’
rights protection and risk reduction.
(4) Ongoing Credit Risk Management
Mid-term management mechanism has been set up, in accordance with Regulations Governing Corporate
Financing Account Management, as to monitor credit risk of the account and any change in the borrowers’
¿QDQFHVRURSHUDWLRQVDQGIRUUHYLHZRI³'HYHORSLQJ$FFRXQW´WRDGMXVWULVNH[SRVXUHDWDSSURSULDWHWLPH
or to take action to transfer credit risk or demand for additional collateral & external guarantee.
(5) Post-loan Mechanism
According to different client's credit rating and product features, we stipulated Credit Review Principle, which
shall be executed by an independent unit on regular basis.
5. Methods of Legal Capital Require
ments.
Currently we adopt the Standardized Approach.
(b)The risk exposure and capital requirement after standardized approach risk mitigation
December 31, 2014
Types of risk exposure
Sovereigns
Exposure value after risk mitigation
Regulatory Capital (Note2)
73,685,969
0
163,267
2,612
34,731,462
1,464,918
118,661,769
8,992,610
Retail portfolios
101,045,711
7,139,323
Residential properties
123,121,288
7,374,679
745,226
180,341
8,281,763
521,312
460,436,455
25,675,795
Non-central government public sector entities
Banks (including multilateral development
banks)
&RUSRUDWLRQVLQFOXGLQJVHFXULWLHV¿UPVDQG
insurance)
Equity investments
Other Assets
Total
Note 1: Filled in the information about the previous season as of the printing date of the annual report:
Note 2: Regulatory Capital is the exposure amount after risk mitigation, times risk weight and minimum capital adequacy ratio (CAR).
153
B. Asset Securitization Risk Management System, Risk Exposure and Legal Capital
(a)Asset Securitization Risk Management System:
2014
Content
(Disclosed Separately in accordance with Banking Book and Trading Book)
Category
1. Asset Securitization Management Strategies and
Procedures
(1) Asset Securitization Management Strategies
$FWLYDWLRQRIWKHEDQNDVVHWVWKURXJKVHFXULWL]DWLRQWRSURYLGHGLYHUVL¿HGFDSLWDOUDLVLQJ
FKDQQHOVWRPD[LPL]HWKHHI¿FLHQF\RIDVVHWVXWLOL]DWLRQ
(2) Asset Securitization Management Procedures
The corporate and individual sectors of the Bank will establish the asset securitization
trading project in coordination with the operation strategies and capital adequacy ratio
of the Bank and submit it to the Board of Directors for approval.
2. Asset Securitization Management, Organization and
Structure
7KH)LQDQFLDO0DUNHW'LYLVLRQFRUSRUDWH¿QDQFHEXVLQHVVXQLWSHUVRQDO¿QDQFHEXVLness unit: The Financial Market Division, corporate finance business unit, personal
¿QDQFHEXVLQHVVXQLWDUHLQFKDUJHRIDVVHVVLQJDVVHWDOORFDWLRQWKHSODQQLQJRILVVXing and trading framework, and other affairs associated with asset securitization.
(2) Financial Management Division: Financial Management Division is in charge of asVHVVLQJWKH¿QDQFLDOLQÀXHQFHEURXJKWIURPDVVHWVHFXULWL]DWLRQ
(3) Rise Management Division: Rise Management Division is in charge of assessing the
LQÀXHQFHRIDVVHWVHFXULWL]DWLRQRQ&DSLWDO$GHTXDF\5DWLR
3. Scope and Characteristics of the Asset Securitization
Risk Report and Measurement System
The routine risk report:
The investing positions and gains (loss) resulting from securitized asset products.
The current status analysis of the issued securitized product underlying asset.
The trust report and custody institutions report.
4. Asset Securitization Hedge or Risk Minimization
Strategy, and Strategy and Procedures of Monitor
Continuing Validity of Hedge and Minimization Tools
Business units, financial management units and risk management units reviewed the
cost-effectiveness after issuance as the assessing standard on whether to continue processing the asset securitization cases in the future.
5. Methods Adopted for the Capital Requirements
The Standardized Approach.
6. Overall Disclosure Requirement:
1) The purpose of securitization and the relevant
type of risks the Bank undertakes;
2) The other risks derived out of securitized assets
(e.g. liquidity risk);
3) In the process of securitization, all kinds of role
played by the Bank and the relevant level of
involvement;
4) Description of credit involved in securitization
exposure and the procedures taken to monitor
PDUNHWULVNVÀXFWXDWLRQV
5) The risk mitigation policy to disperse risks from
securitization and re-securitization.
N/A
7. The accounting policy adopted by the Bank for
securitization
N/A
8. In Banking Book, the name of the External Rating
Institution (ECAI) and the status of exposure of each
asset securitization
N/A
9. Any significant changes to numbers since the last
report (e.g. the Transfer between Banking Book and
Trading Book)
N/A
1RWHWRDERYHVKDOOEH¿OOHGLQRQO\IRUWKHIRXQGLQJEDQNVZLWKRXWVWDQGLQJSRVLWLRQV
(b)Asset Securitization: None
154
(c)Securitized Asset Risk Exposure Amount and Capital Requirement- in accordance with transaction types
December 31, 2014
Traditional Type
Risk
Exposure
Type
The Role
of
The Bank
Composition Type
Total
Exposure
Exposure
Asset
Type
Exposure
Capital
Capital
Amount
Required Reserve or Required
④
⑤=①+③
②
Buy-in
③
Capital
Required
⑥=②+④
Reserve or
Buy-in
Limit for
Liquidity
Financing
Strengthen
Credit
CBO
2,240,509
0
0
2,240,509
128,203
0
0
2,240,509
128,203
N/A
0
0
0
0
0
0
0
0
0
Booking
Type
Total
①
Capital
Required
before
Securitization
Banking
Book
Non
founding
Bank
N/A
Trading
Book
N/A
Sub-total
Founding
Bank
0
0
0
0
0
0
0
0
0
2,240,509
0
0
2,240,509
128,203
0
0
2,240,509
128,203
Banking
Book
N/A
0
0
0
0
0
0
0
0
0
0
Trading
Book
N/A
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
2,240,509
0
0
2,240,509
128,203
0
0
2,240,509
128,203
0
Sub-total
Total
Explanations:
7KH³$VVHW7\SH´LVVXEGLYLGHGEDVHGRQWKHDVVHWW\SHVIRUVHFXULWL]DWLRQH[FUHGLWFDUGVKRPHHTXLW\ORDQFDU¿QDQFLQJRUVHFXULWLHVW\SHVLQYHVWHG0%6
Commercial Real Estates Foundation Stock, ABS and CLO.)
2. Risk exposure amount of banking book shall include risk exposure amount after risk mitigation.
3. “Limit for Liquidity Financing” shall include risk exposure amount drawn or not yet drawn
C. Information on Securitization Products
(a)Investment Summary of Securitization Products:
December 31, 2014
Item (Note 1)
Account Title Booked
CBO
Financial Asset that are
available for sale:
Corporate Bonds
Original Cost
2,215,850
Accumulated
Marked to Market
3UR¿WDQG/RVV
24,659
Accumulative
Impairment
Book amount
0
2,240,509
Note 1: The table contains the securitization products issued in Taiwan and overseas. The items are completed according to their account title and based on the
IROORZLQJFODVVL¿FDWLRQV
(1) Mortgage-Backed Securities (MBS): Including the residential mortgage-backed securities (RMBS), commercial mortgage backed securities or asset
backed securities (CMBS), collateralized mortgage obligation (CMO), or other mortgage-backed securities.
%HQH¿FLDU\6HFXULWLHVRU$VVHW%DFNHG6HFXULWLHV$%6,QFOXGLQJWKHVHFXULWL]HGEHQH¿FLDU\VHFXULWLHVLQIRUPVRIFROODWHUDOL]HGORDQREOLJDWLRQ&/2
FROODWHUDOL]HGERQGREOLJDWLRQ&%2DVVHWEDFNHGVHFXULWLHVRUEHQH¿FLDU\VHFXULWLHVEDVHGRQDXWRORDQFRQVXPHUORDQRUFDVKFDUGORDQDVVHWEDFNHG
VHFXULWLHVRUEHQH¿FLDU\VHFXULWLHVEDVHGRQWKHFROODWHUDOL]HGOHDVHGHEWRWKHUVHFXULWL]DWLRQEHQH¿FLDU\VHFXULWLHVRUDVVHWEDFNHGVHFXULWLHV
6KRUWWHUPEHQH¿FLDU\VHFXULWLHVRUVKRUWWHUPDVVHWEDFNHGFRPPHUFLDOSDSHU$%&3
(4) Collateralized Debt Obligation (CDO)
5HDO(VWDWH6HFXULWL]DWLRQ'H¿QHGDVWKH5HDO(VWDWH$VVHW7UXVW5($7
(6) Bonds issued by Structure Investment Vehicle (SIV)
(7) Other securitization products.
1RWH7KHWDEOHFRQWDLQVWKHEHQH¿FLDU\VHFXULWLHVRUDVVHWEDFNHGVHFXULWLHVKHOGE\WKH%DQNZKHQDFWLQJDVWKHRULJLQDWRURIWKHVHFXULWL]DWLRQ
155
(b)For the original cost of any single securitization product investment over NTD300 million (not including the
one held for credit enhancement under the role by the Bank as the originator) the following information
should be disclosed:
Name
of the
securities
(Note 2)
Account
Currency
name
The issuer
and its
location
Purchase
Date
Maturity
Interest Rate
Method of
Accu- AccuAttacheCredit
Interest and Original mulated mulated Book
ment
Rating
Principal
Cost
MTM Impair- Amount
Point
(Note3)
Repayment
P&L
ment
(Note 4)
Description of
Asset Pool
(Note 5)
1st Yr.:3M USD
LIBOR + 3%
2nd -5th Yr.:
EIRLES 2
Series[351]
Collaterized
Notes
Financial
Special
Assets
Purpose
AFS-
USD
Vehicle
Corporate
incorporated
Bonds
in Ireland
Interest Paid
3M USD LIBOR +
Quarterly
4.5% + 5 * (Index
2011.03.16 2016.04.06
Return – Strike)
Interest Rate
USD 20 million in
Principal
A
Paid at
633,100
-823.03 0
632,277
Maturity
Floor:
6 April 2016 ISIN
XS0607798484]
in a single
Q5-Q8:1.50%;
[LLOYDS 4.38%
payment
Q9-Q20: 2.00%
Interest Rate Cap:
Q5-Q20: 8.00%
1st Yr.:3M USD
LIBOR + 3%
2nd -5th Yr.:
3M USD LIBOR +
EIRLES 2
Series[352]
Collaterized
Notes
Financial
Special
Assets
Purpose
AFS-
USD
Vehicle
Corporate
incorporated
Bonds
in Ireland
Interest paid
1.5% + 5 * (Index
quarterly,
Return – Strike)
2011.03.18 2016.04.06
Interest Rate
Floor:Q5-Q8:
USD 30 million in
principal
BBB
paid at
949,650
14,910
0
964,560
maturity
1.50%;
6 April 2016 ISIN
XS0607797916]
in a single
Q9-Q12: 2.00%;
[BBVASM 4.06%
payment
Q13-Q16: 3.00%;
Q17-Q20: 3.50%
Interest Rate Cap:
Q5-Q20: 8.50%
1st Yr.:3M USD
LIBOR + 3%
2nd -5th Yr.:
3M USD LIBOR +
EIRLES 2
Series[353]
Collaterized
Notes
Corporate
Bonds
quarterly,
Return – Strike)
Assets
AFS-
Interest paid
1.5% + 5 * (Index
Financial
USD
SPV/Ireland 2011.03.16 2016.04.06
Interest Rate
Floor: Q5-Q8:
1.50%;
Q9-Q12: 2.00%;
Q13-Q16: 3.00%;
USD 20 million in
principal
A-
paid at
maturity
in a single
633,100
10,573
0
643,673
[RBS 43/8% 16
March 2016 ISIN
US78009PCC32]
payment
Q17-Q20: 3.50%
Interest Rate Cap:
Q5-Q20: 8.50%
Note 1: The table includes the securitization product issued in Taiwan or overseas.
1RWH7KHVDPHVHFXULWL]DWLRQSURGXFWEXWIURPGLIIHUHQWLVVXDQFHVKDOOEH¿OOHGLQZLWKIXOOQDPH
Note 3: Filled in with the result of latest credit rating review.
Note 4: Attachment point means the percentage that position from different tranches held by the Bank over the total issued securitization product. For example, the
Bank purchased the securities from Collateralized Debt Obligation (CDO) tranche A, and if there is tranche BBB and equity tranche with seniority subordinate
to tranche A, and the total issued amount of tranche BBB and equity tranche is 12% of total CDO issued amount, the attachment point is 12%.
1RWH$QDVVHWSRROUHSUHVHQWVWKHJURXSRIDVVHWVZKLFKWKHRULJLQDWRULQVWLWXWLRQHQWUXVWVRUFRQYH\VWRD6393OHDVH¿OOLQWKHLQIRUPDWLRQRIWKHDVVHWSRROE\
specifying the asset type (also specify if it is senior debt or subordinate debt), details, the book amount in original currency and the number of transactions.
156
(c)For positions held for credit enhancement purpose when the Bank acts as the originator institution, the
information that shall be disclosed: None.
(d)When the Bank acts as the purchaser or liquidation purchaser of credit impaired asset, the information that
shall be disclosed: None.
(e)If the Bank had acted as the guarantor of the securitization product or provides the liquidity facility, the
information that shall be disclosed: None.
D. Operational risks management system of and capital requirements
(a)Operational risk management system:
2014
Items
Contents
1. Strategies and procedures of
operational risk management
(1) Strategies of operational risk management
3ROLFLHVRIRSHUDWLRQDOULVNPDQDJHPHQWFOHDUO\GH¿QHGWKHVFRSHVWUXFWXUHDQGSURFHGXUHVRIRSHUDWLRQDO
risk management to strengthen risk management culture and awareness, formulate a well-established mecha
nism, control risk exposure and keep track of the progress of improvement on risk management. Seeking to ef
fectively lower the bank-wide operational risks and achieve set business/management targets.
(2) Procedures of operational risk management
To implement the culture of operational risk management to all core values, products, business activities, operational procedures and IT systems, the following are the required management procedures:
A.All types of business required to be supplemented with a procedure and related regulations for operations to
effectively monitor any risk.
B.Stipulate "Key Points of Collection Operational Risk Events" to regulate the procedures and scope of
collected events.
E.stablish operational risk management system, using technological processes to collect any incidents
incurring losses from internal operational risks.
&7KURXJK2SHUDWLRQDO5LVNDQG5HYLHZLQJ&RQWUROPHFKDQLVPDQGFULWLFDOULVNLGHQWL¿FDWLRQLQGH[HYDOXDWH
and monitor all operational risks.
D.Stipulate "Policies of Reviewing and Approving New Products/Business" to identify, measure and supervise
related risks of new products, new services, and new businesses.
E.Formulate "Business Continuity Plan" and each operation continuance project which is practiced routinely to
ensure continuance of business or reduce the loss of business break down.
2. Organization and structure of
operational risk management
The Board of Directors
The Board of Directors situates on the highest decision-making level of the Bank and is the ultimate responsible
unit for risk management. The Board of Directors is entitled to review and approve the strategies and policies of
risk management regarding the elements of business environment and bank-wide status quo to build up a culture
of risk management in the Bank and solidify quality of risk control.
Risk Management Committee
Risk Management Committee is responsible for evaluating and supervising the Bank's risk level, current risks
and compliance with risk procedures. Based on bank-wide business strategies, the Risk Management Committee
should deliberate and promulgate risk policies while at the same time supervise and assess the implementation reVXOWVRIULVNFRQWURO7KH5LVN0DQDJHPHQW&RPPLWWHHLVDOVRHQWLWOHGWR¿OHDUHSRUWDQGVXEPLWUHFRPPHQGDWLRQV
WRWKH%RDUGRI'LUHFWRUVDIWHUUHYLHZLQJWKHFODVVL¿FDWLRQVWDQGDUGVRIULVNDVVHWVDQG13/SURYLVLRQSROLFLHVIRU
the Board of Directors to review and approve.
$XGLW2I¿FH
Audit and evaluate bank-wide structure and procedures on all types of procedures and operations to ensure effective implementation of operational management mechanism.
Risk Management Group
The department has formulated the department of operational risk management, which is responsible for stipulating and planning related issues for bank-wide operational risk management.
Tier 1 Units
According to management principle and methods stipulated by Risk Management Division, it is responsible for
planning, promoting and promulgating all matters related to operational risk management with each unit. Shall also
supervise and review execution condition.
Other Departments
Based on the matters related to operational risk management set by Tier 1 units of HQ, other departments shall
educate team members on implementing and reporting any risk event within.
157
Items
Contents
3. Scope and features of opera
tional risk reports and measure ment system
(1) Assessment scope of operational risk reports Exercise operational risk event collection, operational risk and
FRQWURODVVHVVPHQWDQGFULWLFDOULVNLQGH[DVPDQDJHPHQWWRROVWRRSHUDWHULVNLGHQWL¿FDWLRQPHDVXUHPHQW
and reports. Risk management group is responsible for integrating all related factors and compile an operation
al risk report periodically.
(2) Features of assessing reports for operational risks
A.Systemic Reporting: Each department reports operational risk incident through operational risk management
V\VWHP5LVNPDQDJHPHQWJURXSFODVVL¿HVULVNVEDVHGRQW\SHVRIORVVHYHQWVDQGLQGXVWULHVUHTXLUHG
by regulators to analyze bank-wide loss condition and executing progression of Improvement plan.
B.Overall Assessment: The Tier 1 unit of HQ shall operate operational risk and control assessment, analyze
bank-wide operational risks of all operational procedures. Address alternative improvement plan based on
the assessment result.
C.Periodical Monitoring: The Risk Management Department shall collect critical risk indexes regularly, monitor
EDQNZLGHULVNH[SRVXUHOHYHORQVSHFL¿FDJHQGD
4. Policies for operational risk
hedging or risk mitigation, and
policies/ procedures to continue effective supervision on
risk circumvention and mitigation instruments
(1) Risk hedging or mitigation policies currently adopted by the Bank are as follow:
A.Formulated “Policy of Business Continuity Management” and all types of related projects to reduce the
losses incurred from emergencies or disasters.
B.Purchased” General Insurance for Banks” to mitigate operational risks.
C.Several businesses are outsourced to transfer risks.
(2) The Bank will continue to monitor the effectiveness of instruments to hedge and mitigate risks by collecting
events of operational risks, implementing internal control and independent audit on the management system of
operational risks.
5. Methods of adopting legal
capital requirements
The Bank adopts the Basic Indicator Approach.
(b)Operational Risk-Based Capital Requirement:
December 31, 2014
Year
*URVV3UR¿W
2012
8,158,212
2013
8,959,294
2014
9,197,911
Total
26,315,417
Capital Requirement
1,315,771
E. Market risk management system and capital requirement
(a)Market risk management system:
2014
Items
Contents
1. Strategies and procedures for market risk
management
The strategies of market risk management stipulate the position caps for all types of investment portfolio, based on return on capital of risk adjustment, stop-loss limits and budget connection to consider
market feature, risk appetite and to achieve optimal asset allocation. The market risk management unit
VKDOODVVHVVWKHPDUNHWULVNH[SRVXUHRIWUDGLQJERRNFDOFXODWHWKHSUR¿WDQGORVVEHIRUHUHSRUWLQJWR
senior managers on a regular basis.
2. Organization and structure of market risk
management team
Market Risk Management Department is set under the Bank's market management group. It is responsible for stipulating policies and strategies of market risk management, testing the pricing models and
HYDOXDWLRQV\VWHPVIRU¿QDQFLDOSURGXFWVXVHGE\WUDGLQJXQLWVVWLSXODWLQJWKHPDUNHWULVNOLPLWVLGHQtifying, assessing and controlling the market risks of new products and periodically providing management statements for submission to high-ranking executives.
3. Scope and features of market risk reports
and measurement systems
The market risk management unit shall provide reports on a regular basis and the risk management
GHSDUWPHQWVKDOOFROOHFWSRVLWLRQVDQGSUR¿WDQGORVVPRQWKO\IRUVXEPLVVLRQWRULVNPDQDJHPHQWFRPPLWWHHDQGKLJKUDQNLQJH[HFXWLYHV7KHSRVLWLRQVDQGSUR¿WDQGORVVVKDOOEHUHSRUWHGWRWKH%RDUGRI
Directors every quarter.
7KH%DQNXVHV.RQGRUDQG$%6V\VWHPWRFDOFXODWHWKHULVNH[SRVXUHDQGSUR¿WDQGORVVRIH[FKDQJH
rate, interest and related products.
158
Items
Contents
4. Policies for market risk hedging or risk
mitigation, and policies/ procedures to
continue effective supervision on risk
circumvention and mitigation instruments
7KHWUDGLQJXQLWVFDQVWLSXODWHWUDGLQJVWUDWHJLHVXQGHUHDFKLQYHVWPHQWSRUWIROLRDQGGH¿QHWKHREMHFW
of transaction and risk mitigation tools. The market risk management unit shall monitor the risk expoVXUHRIHDFKLQYHVWPHQWSRUWIROLRLVQRWH[FHHGLQJWKHDXWKRUL]HGOLPLWVDQGFRQ¿UPWKHORVVDIWHUULVN
mitigation is not reaching stop-loss limits.
5. Methods of adopting legal capital
requirements
The Bank currently adopts the Standardized Approach (Note).
Note: Sensitivity analysis method was adopted since August 2014 for FX Option products.
(b)Capital to be allocated for market risks:
December 31, 2014
Type of Risk
Capital to be allocated
Interest Rate Risk
280,091
Equity Risk
7,227
Foreign Exchange Risk
25,308
Commodity Risk
0
Total
312,626
1RWH3OHDVH¿OOLQWKHWDEOHVEDVHGRQWKHLQIRUPDWLRQXSWRWKHHQGRIWKHTXDUWHUSULRUWRWKHGDWHRISULQWLQJRIDQQXDOUHSRUW
F. Liquidity risk including the analysis of maturity of assets and liabilities, and explanation of the management of
liquidity risk and liquidity of cash flow gap.
(a)Maturity Dates of NTD:
December 31, 2014
Amount before Maturity Date
Total
Major mature capital
LQÀRZ
RXWÀRZ
Interval Gap
0-10 days
11-30 days
31-90 days
91-180 days
181 days-1 year
Over 1 year
426,621,582
67,986,703
74,123,442
45,605,536
28,643,075
34,119,062
176,143,764
529,051,263
41,079,005
58,579,674
85,021,048
75,079,889
94,977,993
174,313,654
(102,429,681)
26,907,698
15,543,768
(39,415,512)
(46,436,814)
(60,858,931)
1,830,110
Note: This table only shows the NTD amount (not including foreign currencies) of the headquarter and branches.
(b)Maturity Dates of USD:
December 31, 2014
Unit: In Thousands of United States Dollars
Amount before Maturity Date
Total
LQÀRZ
RXWÀRZ
Interval Gap
1-30 days
31-90 days
91-180 days
181 days-1 year
Over 1 year
7,193,541
3,767,458
1,266,809
759,376
679,395
720,413
8,466,360
3,354,870
1,597,886
859,144
1,466,555
1,187,905
(1,272,819)
412,588
(331,077)
(99,768)
(787,160)
(467,492)
Note 1: The above table includes information for headquarter, domestic branches, and OBU branches in USD.
Note 2: Information of any overseas assets accounting for more than 10% of total asset of the Bank should be disclosed in the form of a supplement.
159
(2) Impact and Counter Measures on the Banking Businesses Resulting from Domestic/Foreign Major Policies
and Law Amendments
1. In order to align with the issuance of “Dual Currency Credit Card”, FSC amended Article 44 of “Regulations
Governing Institutions Engaging In Credit Card Business” on July 23 2014, and announced the amendment of
the regulations including “Mandatory Provisions to be Included in and Prohibitory Provisions of Standard Form
Contract for Credit Card” and provisions to be excluded, which took effect as of January 1 2015. The Bank
officially produced the dual currency products as of March 2015 and provided the dual currency services in USD,
EURO and YEN. The service will provide businessmen with the exclusive profits and a large amount of rebate to
fulfill the needs of clients.
2. To execute the measures of Know Your Customer, Know Your Product and risk disclosure, FSC requires
the Bankers Association of the Republic of China to amend “Self-regulatory Codes of Processing Financial
Derivatives by Banks” and “Self-regulatory Codes of Business Risk Management for Processing Financial
Derivatives by Banks” to strengthen the risk management in banks and execute the profits guarantee for
clients. Further, the FSC also requires the Joint Credit Information Center to build an inquiry system for the
allocated amount and usage of financial derivatives, in order to facilitate banks’ monitoring of total credit risk
of clients and strengthen the risk control of banks. FSC amended the “Mandatory Provisions to be Included in
and Prohibitory Provisions of Standard Form Contract for Credit Card” on December 1, 2014 to strengthen the
monitoring of processing financial derivatives by banks and profits guarantee for clients. For such amendment,
the bank strengthens the risk management and profits guarantee in processing complicated high-risk products,
the reviewing procedures for processing new products, remuneration for salesmen and regulations of know your
product, etc. and also revise the internal operation regulations to heavily develop the business of processing
financial derivatives by banks.
(3) The influence on the financial business due to change in technology and industries and its responding
measures:
The progress in technology has changed the operation models for banks. The most obvious example is the emergence of
internet banking, APP and ATM. The APP and ATM brought the convenience in terms of time and space to customers and
reduced the usage of substantial channels. The Self-Service Banking also took the lead of Self-Service. Especially the
expansion of Bank 3.0 allows the consumers to shop (mobile credit card, mPOS ) at anytime and anywhere through APP
DQGWRSURFHVVWKH¿QDQFLDOWUDGLQJH[SDQGLQJWKHVHUYLFHFDWHJRULHVRQOLQHZKLFKZLOOEHFRPHWKHWUHQGLQWKHIXWXUH
Further, in alliance of the technological progress and Big Data evaluation, as to the different trading customs and habitual
EHKDYLRURIFOLHQWVWKHEDFNHQGRSHUDWLRQDODQGV\VWHPDWLFPDQDJHPHQWZLOOSURYLGHPRUHHI¿FLHQWDQGYDULRXVVHUYLFH
and products to enhance the operational performance and raise the customer satisfaction on service quality.
Responding Measures:
1. Internet banking shall provide clients with incentives for processing banking business through personal
computers, and grasp the market trends to produce innovative products whenever necessary to preserve the
advantage and chances.
2. Viewing the information technology from traditional supporting trading processing to supporting and planning.
Making great use of the information technology to speed up the system development and ensuring cash flow
through such technology in alliance with the speedy financial progress. For example, developing a new core
system (the main engine of banking), and changing the reception operational and sealing system to enhance the
products developing and service quality.
160
3. Bring in CRM to fully understand and evaluate the customer information and to further analyze their needs and
produce more products and services based on the needs of each customer through the utilization of technology.
Providing customers with exclusive, value added, timely and speedy investment financing service to arouse
loyalties in the customers.
(4) The influence of change in banking image on banking and its responding measures:
The operational performance and image of banking is an important indicator for customers in choosing banks after
the financial crisis. The Bank knows the image and operational performance are two sides to one coin and has
launched a series of commercials: “the extraordinary side of ordinary TC Bank” since 2010 to respond to the real
emotions of the Taiwanese audience, and has aimed to become a bank that knows Taiwanese the best. For now,
the image of the Bank has greatly improved and became one of the banks most wanted by customers.
Responding Measures:
Treasure the customers’ trust, develop individual financing, corporate financing and financial market services,
continue providing innovative, various products, thoughtful and expeditious services to fulfill each financial needs
of customers.
(5) The expected performance, risks in processing mergers and its responding measures:
None in the past year
(6) The expected performance, risks in expanding operational locations and its responding measures:
None in the past year
(7) The risks in centralization of business and its responding measures:
The Bank not only promulgates concentration limits with respect to same person, stakeholder, country, group
entities and industry in accordance with the competent authorities’ regulations, but also promulgates relevant limits
for financial derivatives, financing credit business and receiving stocks as securities to disperse the credit risks.
(8) The influence and risks of change in management and its responding measures:
The Bank has gone through capital increase, the arrival of new operational team and restructuring of units at the
end of 2007. Each unit of service and operation has run smoothly and produced positive benefits to the operational
performance of the Bank.
Responding measures: Continuing to strengthen risk control management for customers, enforcing legal
compliance and viewing personal financing, corporate financing and financial market operation as three main
points for business development.
(9) The impact, risk and responsive measures from stock transfer/change of director, supervisor or any big
shareholder with more than 1% shares:
No major impacts to the Bank when Chong Xi Co. Ltd transferred its voting right for preferred shares of Private
Placement in July 2014.
(10) Litigious and non-litigious matters. List of major litigious, non-litigious or administrative disputes that
involve the Bank and its Directors, Supervisors, President, Responsible Person, any Major Shareholder
holding a stake of greater than 1 percent, and any company or companies controlled by the Bank; and
161
KDYHEHHQFRQFOXGHGE\PHDQVRID¿QDODQGDUELWUDU\MXGJPHQWRUDUHVWLOOXQGHUOLWLJDWLRQ:KHUHVXFK
a dispute could materially affect Stockholders’ Equity or the prices of the company's securities, the facts
of the dispute, amount of money at stake in the dispute, the date of litigation commencement, the main
parties to the dispute, and the status of the dispute as of the date of printing of the annual report shall be
disclosed.:
1. The Bank
Macauto Industrial Co., Ltd. engaged a currency option trades with the Bank during 2006-2008, and due to
transaction loss, commenced litigation and requested compensation in the amount of NT$224,639,000. The
court session began on January 7, 2011 and the Bank prevailed at the district court level on June 8, 2012 and
also won at appeals court on August 7, 2013. However, Macauto had filed for appeal, and the Supreme Court
dismissed the appeal on September 16 2014. The case has now concluded.
2. The summary table of verdict or significant litigation/administration dispute during 2014/1/1~2015/2/28 involving
Directors, Supervisors, President, and Major Shareholder who holds more than 1% shares and their relevant
company:
Title
Company
:LWKRU:LWKRXW/LWLJDWLRQ
Impact on the Bank
Director
Kymco Co., Ltd.
With Litigation
None
Relevant company
With Litigation
None
Major Shareholder
Chinatrust Life Insurance Co., Ltd.
With Litigation
None
2WKHU6LJQL¿FDQW5LVNVDQG5HVSRQVLYH0HDVXUHVNone.
7. Crisis Emergency Response Mechanisms:
The Bank has established a Business Continuity Management Team and an Emergency Response Team to maintain
the corporate image and to strengthen communications with the community as well as to promptly handle any major
incidents. In the event of natural disasters, man-made catastrophes, or the occurrence of any other significant
incidents that affect business, life, property, and the image of the Bank, the aforementioned teams shall convene
meetings and resolve crisis immediately, reducing any impact on the Bank, and continuously develop the Bank's
business operation.
8. Other Major items:
None.
162
VIII
Special Notes
VIII Special Notes
1. Information of Affiliates
(1) Consolidated Business Report of Affiliates
1. Structure Chart of Affiliates
Ta Chong Commercial
Bank Co., Ltd.
(parent company)
100%
shareholding
100%
shareholding
100%
shareholding
(subsidiary company)
Ta Chong International
Leasing and Finance
Co., Ltd.
Ta Chong Life
Insurance Agency
Co., Ltd.
Ta Chong General
Insurance Agency
Co., Ltd.
100%
shareholding
34.9%
shareholding
Ta Chong Finance
(Hong Kong) Limited
Ta Chong Securities
Co., Ltd.
100%
shareholding
Ta Chong Venture
Capital Co., Ltd.
164
2. Basic Information of Affiliates
Record Date: December 31,2014
Name of Enterprise
Date
of Establishment
Address
Paid-In
Capital
Main Business
Items
1992.03.18
1F, 2F, 5F, 6F, 8F, 9F, 10F, 11F, 13F, 14F, 15F and
B1, No. 2, Sec. 5, Xinyi Rd., Xinyi Dist., Taipei City
11049, Taiwan (R.O.C.)
27,688,092
Banking
1997.09.02
2F, 3F, No. 93, Shouchang Rd., Sanmin Dist.,
Kaohsiung City 80775, Taiwan (R.O.C.)
3,777,618
Security brokers &
dealers
Ta Chong International Leasing and
Finance Co., Ltd.
1997.04.09
9F-1, No. 58, Zhongzheng 2nd Rd., Lingya Dist.,
522,560
Co., Ltd.
2001.01.10
9F., No. 2, Sec. 5, Xinyi Rd., Xinyi Dist., Taipei City
3,000
Insurance agency
Ta Chong General Insurance Agency
Co., Ltd.
2001.01.16
9F., No. 2, Sec. 5, Xinyi Rd., Xinyi Dist., Taipei City
3,000
Insurance agency
Ta C h o n g F i n a n c e ( H o n g K o n g )
Limited
2006.1.24
Apt: 1101, 11F, Shu Fu Commercial Building, No. 93103, Yun Le Street, Sheung Wan, Hong Kong.
483,246
Finance company
Ta Chong Venture Capital Co., Ltd.
2013.12.31
22F.-1, No. 2, Zhongshan 2nd Rd., Qianzhen Dist.,
200,000
Venture capital
Leasing
3. Business Overview of Affiliates:
Record Date: December 31,2014
Net Worth
Operating
Income
(Note 2)
Earnings per
Operating Period (loss)
Share (Net
Profit (Loss)
Gain
Loss) (after
(Note 2)
(after tax)
tax) (NTD)
Capital
Total Assets
Total
Liabilities
Ta Chong Commercial Bank
Co., Ltd.
25,805,739
461,928,689
429,324,902
32,603,787
9,356,985
3,113,682
2,635,095
1.04
3,777,618
13,186,716
8,353,789
4,832,927
976,511
137,967
202,525
0.54
Leasing and Finance Co., Ltd.
522,560
526,181
462,158
64,023
208,316
3,915
(983)
(0.02)
Ta Chong Life Insurance
Agency Co., Ltd.
3,000
194,698
111,286
83,412
717,695
65,641
54,733
182.44
Agency Co., Ltd.
3,000
3,374
726
2,648
8,417
1,080
1,083
3.61
Ta Chong Finance (Hong
Kong) Limited (Note 1)
502,049
67,342
0
67,342
561
(3,234)
(3,234)
(0.03)
Ta Chong Venture Capital
Co., Ltd.
200,000
203,682
3,464
200,218
185,806
192,126
369
0.02
Name of Enterprise
(Note 1) The numbers shown on the balance sheet of said foreign company were converted into New Taiwanese Dollars based on the year end exchange rate of 4.0817.
The gain and loss items were converted into New Taiwanese Dollars based on the exchange rate at 3.9141.
(Note 2) Due to industry peculiarities, Ta Chong Commercial Bank uses net income in lieu of operating income, and pre-tax (loss) gain in lieu of operating (loss) gain.
(2) Consolidated Financial Statements of Affiliates: for consolidated statements of the same parentsubsidiary company, see Appendix 1 in this annual report.
(3) Declarative Statement: see p.172 in this annual report.
165
VIII Special Notes
2. Private equity securities and financial debentures from the latest year up until the publishing
date of the annual report.
Information on Private Securities
2014 Private Overseas Convertible Financial Bonds
Date of issued:Aug 7 , 2014
Item
Type of private securities
Overseas convertible corporate bonds
Date and Amount Resolved at the
Shareholders’ Meeting
USD 350 million resolved at the shareholders’ meeting on May 14, 2014.
Basis and Rationale for Price
Setting
The price setting for private placement is calculated based on the company’s operating performance, future outlook,
the stock price prior to the price setting date and in accordance with the regulations provided in the “Directions for
Public Companies Conducting Private Placements of Securities”.
1. Principle for setting the conversion price: upon issuance, the conversion price is determined by selecting
the higher record price from the two record prices below prior to the record date for price determination in
accordance with Article 2 in the “Directions for Public Companies Conducting Private Placements of Securities”,
multiplied by a convertible premium rate of 111% (the conversion price is rounded up to the nearest cent):
(1) The simple average closing price of the common shares of the TWSE listed or GTSM listed company for
either the 1, 3, or 5 business days before the price determination date, after adjustment for any distribution of
stock dividends, cash dividends or capital reduction.
(2) The simple average closing price of the common shares of the TWSE listed or TPEx listed company for the
30 business days before the price determination date, after adjustment for any distribution of stock dividends,
cash dividends, or capital reduction.
Selection Method for Designated
Person
The subscriber of this private overseas convertible financial bonds is Carlyle Asia Partners II, L.P. and should be
eligible as a strategic investor.
Reason Necessitating Application
for Private Securities
Enrich and strengthen the company’s foreign working capital and financial structure
Payment Completion Date
2014/08/07
Object of private
placement
Requirement
Cooperative
Meadowstream
Investment W.A.
Subscriber’s Information
TCB Investment
(Antilles) I N.V.
Carlyle Asia
Partners II, L.P.
Article 43-6
(1) (ii) of the
Securities and
Exchange Act
Subscribed
Amount
Relationship with the Bank
Business Condition of
the Participating Bank
10,507,700,000
Affiliate of the company’s
corporate director, Pei
Kan Ltd., and the major
shareholder, Chong Xi Co.,
Ltd. who holds more than 10%
of the company’s shares
Nil
0
Nil
Nil
0
Has 100% shareholding of
both the company’s corporate
director Pei Kan Ltd., and the
major shareholder, Chong Xi
Co., Ltd. who holds more than
10% of the company’s shares
Nil
Actual Subscription (or converted)
Price
NTD 10.77
Difference Between Actual
Subscription Price and Reference
Price
The actual subscribed (convertible) share of NTD 10.77 is higher than the reference price (NTD9.70) for the common shares
of the object of transaction. Premium price is Over 11%
Impact of Private Placement on
Shareholders’ Rights (ie: Resulting in
Increase of Accumulated Loss)
6HUYHVWRHQULFKIRUHLJQZRUNLQJFDSLWDOUHGXFHLQWHUHVWSD\PHQWVWKHUHE\VWUHQJWKHQLQJWKHFRPSDQ\¶V¿QDQFLDOVWUXFWXUH
having a positive impact on shareholders’ rights.
Private Equity Fund Operation and
Implementation Progress
Will be completed by the Q3 of 2014 according to the initial plan.
%HQH¿WRQ3ULYDWH3ODFHPHQW
7KHSXUSRVHRIDSSO\LQJIRUSULYDWHRYHUVHDVFRQYHUWLEOH¿QDQFLDOERQGVLVWRHQULFKWKHFRPSDQ\¶VIRUHLJQZRUNLQJFDSLWDO
VWUHQJWKHQ¿QDQFLDOVWUXFWXUHDQGHVWLPDWHWRLPSURYHWKHEHQH¿WRIWKHFRPSDQ\¶VFDSLWDODGHTXDF\UDWLR
166
3. This Bank’s stocks held or disposed of by its subsidiaries from the latest year up until the
publishing date of the annual report.
Unit: In Thousands of New Taiwan Dollars; shares; %
Name of
Subsidiary
Paid- In
Capital
Number of
Shareholding
Date of
Source of
Share and
percentage Acquisition
Funds
Amount
by the Bank or Disposal
Acquired
Common
shares for
the year
2014
Ta Chong
Securities
Co., Ltd.
3,777,618
Own
fund
Shares
Disposed
and
Amount
2,388,000
shares
5,858,000
shares
11,405
60,724
Shares and
Amount of
amount held
Guarantee of
Amount of
Investment
up until the Condition The Bank’s
loan from the
Gain and
publishing of Pledge Endorsement
Bank to its
Loss
date of the
on behalf of its Subsidiaries
annual report
Subsidiaries
13,208
11,430,000
shares
34.9%
From
2015/01/01
to
2015/03/27
ʊ
ʊ
100,000
shares
None
None
None
92,754
250
1,062
,PSDFWRQWKH%DQN¶VRSHUDWLRQDOUHVXOWVDQG¿QDQFLDOFRQGLWLRQ1RQH
4. Other matters requiring supplementary explanation:
None.
5. If there is any occurrence of any event which has a material impact on shareholders’ equity
or securities prices as provided in Article 36 (2) (ii) of the Securities and Exchange Act from
the previous year up until the publishing date of the annual report, such event shall be
individually recorded.
None.
167
IX
Headquarters and Branches
BRANCHES
TEL.
Address
Headquarters
(02)8786-9888
13F., No.2, Sec. 5, Xinyi Rd., Xinyi Dist., Taipei City 110, Taiwan (R.O.C.)
H. O. Business Dept.
(02)8786-9788
1F., No.2, Sec. 5, Xinyi Rd., Xinyi Dist., Taipei City 110, Taiwan (R.O.C.)
Lingya Branch
(07)223-5550
1F., No.58, Zhongzheng 2nd Rd., Lingya Dist., Kaohsiung City 802, Taiwan (R.O.C.)
Dunhua Branch
(02)2545-5569
1F., No.201, Dunhua N. Rd., Songshan Dist., Taipei City 105, Taiwan (R.O.C.)
Pingtung Branch
(08)722-6060
1F., No.115, Guangdong Rd., Pingtung City, Pingtung County 900, Taiwan (R.O.C.)
Kaohsiung Branch
(07)336-2020
1F., No.2, Zhongshan 2nd Rd., Qianzhen Dist., Kaohsiung City 806, Taiwan (R.O.C.)
Fengshan Branch
(07)740-3699
1F., No.342, Zhongshan W. Rd., Fengshan Dist., Kaohsiung City 830, Taiwan (R.O.C.)
Tainan Branch
(06)226-6120
1F., No.157, Sec. 3, Ximen Rd., North Dist., Tainan City 704, Taiwan (R.O.C.)
Chiayi Branch
(05)229-0666
1F., No.198, Xinrong Rd., West Dist., Chiayi City 600, Taiwan (R.O.C.)
Taipei Branch
(02)2577-1015
1F., No.112, Guangfu N. Rd., Songshan Dist., Taipei City 105, Taiwan (R.O.C.)
Xinzhuang Branch
(02)2203-7676
1F., No.107, Siwei Rd., Xinzhuang Dist., New Taipei City 242, Taiwan (R.O.C.)
Zhongli Branch
(03)494-3000
1F., No.152, Sec. 2, Zhongyang W. Rd., Zhongli Dist., Taoyuan City 320, Taiwan (R.O.C.)
Taichung Branch
(04)2293-8998
1F., No.239, Sec. 3, Wenxin Rd., Xitun Dist., Taichung City 407, Taiwan (R.O.C.)
Da Chang Branch
(07)381-4488
1F., No.501, Juemin Rd., Sanmin Dist., Kaohsiung City 807, Taiwan (R.O.C.)
Trust Department
(02)2658-9655
7F.-3, No.21, Ln. 583, Ruiguang Rd., Neihu Dist., Taipei City 114, Taiwan (R.O.C.)
International Business Dept.
(02)2627-2121
7F., No.21, Ln. 583, Ruiguang Rd., Neihu Dist., Taipei City 114, Taiwan (R.O.C.)
Xinsheng Branch
(02)2321-6600
1F., No.88, Sec. 2, Zhongxiao E. Rd., Zhongzheng Dist., Taipei City 100, Taiwan (R.O.C.)
Banqiao Branch
(02)2955-9966
1F., No.443, Sec. 2, Zhongshan Rd., Banqiao Dist., New Taipei City 220, Taiwan (R.O.C.)
Shalu Branch
(04)2662-1999
1F., No.428, Zhongshan Rd., Shalu Dist., Taichung City 433, Taiwan (R.O.C.)
Bo'ai Branch
(07)316-0699
1F., No.218, Bo’ai 1st Rd., Sanmin Dist., Kaohsiung City 807, Taiwan (R.O.C.)
Offshore Banking Unit
(02)2627-2121
Changchun Branch
(02)2562-6808
1F., No.145, Changchun Rd., Zhongshan Dist., Taipei City 104, Taiwan (R.O.C.)
Sanchong Branch
(02)2970-2899
1F., No.128, Sec. 3, Chongxin Rd., Sanchong Dist., New Taipei City 241, Taiwan (R.O.C.)
Taoyuan Branch
(03)337-8588
11F., No.32, Sec. 1, Chenggong Rd., Taoyuan Dist., Taoyuan City 330, Taiwan (R.O.C.)
169
IX Headquarters and Branches
BRANCHES
TEL.
Address
Yongkang Branch
(06)312-8666
1F., No.21, Zhonghua Rd., Yongkang Dist., Tainan City 710, Taiwan (R.O.C.)
Youchang Branch
(07)364-9911
1F., No.803-1, Houchang Rd., Nanzi Dist., Kaohsiung City 811, Taiwan (R.O.C.)
Qianjin Mini Branch
(07)272-2766
1F., No.217, Zhonghua 3rd Rd., Qianjin Dist., Kaohsiung City 801, Taiwan (R.O.C.)
Wujia Branch
(07)831-9900
1F., No.490, Wujia 2nd Rd., Fengshan Dist., Kaohsiung City 830, Taiwan (R.O.C.)
Wenshan Mini Branch
(02)2935-1715
1F., No.203, Jingxing Rd., Wenshan Dist., Taipei City 116, Taiwan (R.O.C.)
Zhonghe Branch
(02)2240-5100
1F., No.87, Liancheng Rd., Zhonghe Dist., New Taipei City 235, Taiwan (R.O.C.)
Xinying Branch
(06)633-3300
1F., No.117, Zhongshan Rd., Xinying Dist., Tainan City 730, Taiwan (R.O.C.)
Da Heping Branch
(02)2343-2233
1F., No.197-1, Sec. 1, Heping E. Rd., Da’an Dist., Taipei City 106, Taiwan (R.O.C.)
West Tainan Branch
(06)223-0006
1F., No.230, Sec. 3, Jinhua Rd., West Central Dist., Tainan City 700, Taiwan (R.O.C.)
Neihu Branch
(02)2627-1000
Wanli Branch
(06)262-3260
1F., No.12-6, Aly. 88, Ln. 211, Wanli Rd., South Dist., Tainan City 702, Taiwan (R.O.C.)
Annan Branch
(06)355-9083
1F., No.189, Sec. 5, Anhe Rd., Annan Dist., Tainan City 709, Taiwan (R.O.C.)
Jiangcui Branch
(02)2258-1188
1F., No.321, Sec. 2, Wenhua Rd., Banqiao Dist., New Taipei City 220, Taiwan (R.O.C.)
Chang Geng Branch
(03)397-5678
1F., No.5, Fuxing St., Guishan Dist., Taoyuan City 333, Taiwan (R.O.C.)
East Tainan Branch
(06)335-3688
1F., No.81, Chongxue Rd., East Dist., Tainan City 701, Taiwan (R.O.C.)
Hsinchu Branch
(03)564-3500
1F., No.23, No.25, Guanxin Rd., East Dist., Hsinchu City 300, Taiwan (R.O.C.)
Xizhi Mini Branch
(02)2641-7266
1F., No.285, Zhongxiao E. Rd., Xizhi Dist., New Taipei City 221, Taiwan (R.O.C.)
Tianmu Branch
(02)2838-5959
1F., No.27, No.29, Sec. 1, Zhongcheng Rd., Shilin Dist., Taipei City 111, Taiwan (R.O.C.)
Ta Chong Bank, Ren'ai Branch
(02)2341-8822
1F., No.47, Sec. 2, Ren’ai Rd., Zhongzheng Dist., Taipei City 100, Taiwan (R.O.C.)
Chengqing Mini Branch
(07)732-6501
1F., No.123, Dapi Rd., Niaosong Dist., Kaohsiung City 833, Taiwan (R.O.C.)
Yonghe Branch
(02)8921-9218
1F., No.253, Zhongzheng Rd., Yonghe Dist., New Taipei City 234, Taiwan (R.O.C.)
Xiaogang Mini Branch
(07)806-3799
1F., No.678, Hanmin Rd., Xiaogang Dist., Kaohsiung City 812, Taiwan (R.O.C.)
Zhubei Mini Branch
(03)656-3500
1F., No.515, Bo’ai St., Zhubei City, Hsinchu County 302, Taiwan (R.O.C.)
North Taoyuan Branch
(03)326-1234
1F., No.194, Sec. 1, Daxing W. Rd., Taoyuan Dist., Taoyuan City 330, Taiwan (R.O.C.)
170
BRANCHES
TEL.
Address
Yungchun Mini Branch
(02)2723-0688
1F., No.478, Sec. 5, Zhongxiao E. Rd., Xinyi Dist., Taipei City 110, Taiwan (R.O.C.)
Yuanshan Branch
(02)2598-6598
1F., No.47, Sec. 3, Zhongshan N. Rd., Zhongshan Dist., Taipei City 104, Taiwan (R.O.C.)
Fengyuan Mini Branch
(04)2515-6777
1F., No.6, Ren’ai St., Fengyuan Dist., Taichung City 420, Taiwan (R.O.C.)
Changhua Branch
(04)729-1688
1F., No.140, No.142, Zhongxingzhuang, Changhua City, Changhua County 500, Taiwan
(R.O.C.)
North Kaohsiung Mini Branch
(07)556-0566
1F., No.291, Yucheng Rd., Zuoying Dist., Kaohsiung City 813, Taiwan (R.O.C.)
Dali Mini Branch
(04)2418-0538
1F., No.113, Sec. 2, Defang Rd., Dali Dist., Taichung City 412, Taiwan (R.O.C.)
North Taichung Branch
(04)2232-8800
1F., No.103, Sec. 2, Chongde Rd., Beitun Dist., Taichung City 406, Taiwan (R.O.C.)
Zhongping Mini Branch
(08)765-5959
1F., No.290, Minsheng Rd., Pingtung City, Pingtung County 900, Taiwan (R.O.C.)
Qijin Branch
(07)571-5898
1F., No.106, Miaoqian Rd., Qijin Dist., Kaohsiung City 805, Taiwan (R.O.C.)
Zuoying Branch
(07)581-5136
1F., No.255, Zuoying Avenue, Zuoying Dist., Kaohsiung City 813, Taiwan (R.O.C.)
Yancheng Mini Branch
(07)521-1202
1F., No.92, Daren Rd., Yancheng Dist., Kaohsiung City 803, Taiwan (R.O.C.)
Qianzhen Branch
(07)821-4581
1F., No.517, Caoya 2nd Rd., Qianzhen Dist., Kaohsiung City 806, Taiwan (R.O.C.)
Mingcheng Branch
(07)556-7188
1F., No.359, Mingcheng 2nd Rd., Zuoying Dist., Kaohsiung City 813, Taiwan (R.O.C.)
Zhongzheng Branch
(02)2311-3166
1F., No.45, Sec. 1, Hankou St., Zhongzheng Dist., Taipei City 100, Taiwan (R.O.C.)
Donghu Branch
(02)2630-9955
1F., No.421, Jinhu Rd., Neihu Dist., Taipei City 114, Taiwan (R.O.C.)
Anhe Branch
(02)2702-3366
1F., No.78, Sec. 2, Anhe Rd., Da’an Dist., Taipei City 106, Taiwan (R.O.C.)
Duennan Branch
(02)2740-0055
1F., No.2, Sec. 1, Dunhua S. Rd., Songshan Dist., Taipei City 105, Taiwan (R.O.C.)
Nanmen Mini Branch
(02)2321-3300
1F., No.99, Sec. 1, Roosevelt Rd., Zhongzheng Dist., Taipei City 100, Taiwan (R.O.C.)
Sinban Branch
(02)2953-6677
1F., No.156-3, Sec. 1, Zhongshan Rd., Banqiao Dist., New Taipei City 220, Taiwan
(R.O.C.)
Xindian Branch
(02)2218-1399
1F., No.91, Minquan Rd., Xindian Dist., New Taipei City 231, Taiwan (R.O.C.)
Nantun Branch
(04)2471-6066
1F., No.271, Sec. 2, Wuquan W. Rd., Nantun Dist., Taichung City 408, Taiwan (R.O.C.)
Zhongshan Branch
(02)2563-0900
1F., No.59, Sec. 1, Zhongshan N. Rd., Zhongshan Dist., Taipei City 104, Taiwan (R.O.C.)
Dongmen Branch
(02)2321-8833
1F., No.33, Sec. 2, Jinshan S. Rd., Da’an Dist., Taipei City 106, Taiwan (R.O.C.)
Hong Kong Branch
+852 25111719
6XLWH)7ZR3DFL¿F3ODFH4XHHQVZD\+RQJ.RQJ
171
Appendix 1 Consolidated Financial Statements for 2014
Consolidated Financial
Statements for 2014
172
DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES
The companies required to be included in the consolidated financial statements of affiliates in accordance
with the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and
Consolidated Financial Statements of Affiliated Enterprises” for the year ended December 31, 2014 are
all the same as the companies required to be included in the consolidated financial statements of parent
and subsidiary companies as provided in International Accounting Standard 27 “Consolidated and
Separate Financial Statements”. Relevant information that should be disclosed in the consolidated
financial statements of affiliates has all been disclosed in the consolidated financial statements of parent
and subsidiary companies. Hence, we do not prepare a separate set of consolidated financial statements
of affiliates.
Very truly yours,
Ta Chong Bank Ltd.
By
Chien-Ping Chen
Chairman
March 26, 2015
173
174
175
Receivables, net (Notes 4, 5 and 11)
-
-
-
1
-
-
-
-
1
2
-
18
61
-
5
-
8
3
1
100
The accompanying notes are an integral part of the consolidated financial statements.
$ 472,647,379
140,119
Other assets - miscellaneous (Note 18)
TOTAL ASSETS
333,288
Other deferred assets
87,249
4,315,315
Refundable deposits (Notes 8, 39 and 43)
Clearing and settlement fund
123,305
Deferred income tax assets (Notes 4 and 36)
115,531
2,367,703
1,891,206
Intangible assets, net (Notes 4 and 16)
Other non-operating assets, net (Note 17)
3,276,820
Property and equipment, net (Notes 4, 5, 15 and 45)
Prepayments (Note 25)
11,334,246
Other financial assets, net (Notes 4 and 14)
282,000
83,129,463
Available-for-sale financial assets, net (Notes 4,
! 5 and 10)
Restricted assets, net (Notes 13 and 44)
286,691,683
Discounts and loans, net (Notes 4, 5, 12 and 43)
114,749
1,971,409
23,050,004
Securities purchased under agreements to resell
! (Notes 4 and 9)
Current income tax assets (Notes 4 and 36)
35,842,270
Financial assets at fair value through profit or
! loss (Notes 4, 5, 8, 43 and 44)
4,504,378
13,076,641
$
December 31, 2014
Amount
%
Due from the Central Bank and call loans to other
! banks (Notes 4 and 7)
Cash and cash equivalents (Notes 4 and 6)
ASSETS
CONSOLIDATED BALANCE SHEETS
(In Thousands of New Taiwan Dollars)
TA CHONG BANK LTD. AND SUBSIDIARIES
$ 453,377,585
33,721
333,974
110,319
712,769
102,726
49,130
2,395,832
2,413,667
3,342,534
1,365,895
282,000
94,400,239
263,546,113
163,088
22,286,982
2,520,667
28,126,082
19,692,796
$ 11,499,051
-
5
1
6
4
3
100
-
-
-
-
-
-
-
1
1
-
-
21
58
December 31, 2013
Amount
%
TOTAL LIABILITIES AND EQUITY
Total equity
NON-CONTROLLING INTERESTS (Notes 4, 27 and 38)
Total equity attributable to stockholders of
! the Bank
EQUITY ATTRIBUTABLE TO STOCKHOLDERS OF THE BANK
Capital (Note 27)
Common stock
Capital surplus (Notes 4, 27 and 38)
Retained earnings (Notes 27 and 38)
Legal reserve
Special reserve
Undistributed earnings
Other equity (Note 27)
Treasury shares (Notes 4 and 27)
Total liabilities
LIABILITIES
Due to the Central Bank and other banks (Note 19)
Financial liabilities at fair value through
! profit or loss (Notes 4, 5, 8 and 23)
Derivative financial liabilities for hedging, net
! (Notes 4, 5, 23 and 27)
Securities sold under agreements to repurchase
! (Notes 4, 20 and 43)
Payables (Note 21)
Current income tax liabilities (Notes 4 and 36)
Deposits and remittances (Notes 22 and 43)
Financial debentures (Notes 4 and 23)
Liability component of preferred stocks (Notes 4
! and 27)
Other financial liabilities (Notes 24 and 44)
Short-term borrowings
Commercial paper payable, net
Long-term borrowings
Other miscellaneous financial liabilities
Provisions (Notes 4, 5 and 25)
Deferred income tax liabilities (Notes 4 and 36)
Others (Notes 8 and 26)
LIABILITIES AND EQUITY
December 31, 2014
$ 472,647,379
35,751,457
3,147,670
32,603,787
1,785,575
24,075
2,965,796
276,037
(348,878)
25,805,739
2,095,443
436,895,922
978,875
1,501,370
7,497,443
607,972
53,525
783,420
1,635,380
18,794,224
7,732,001
37,650
343,590,852
23,414,551
4,179
12,261,551
$ 18,002,929
Amount
-
2
4
100
8
1
7
1
-
6
-
92
2
-
-
4
2
73
5
%
December 31, 2013
$ 453,377,585
32,683,323
3,161,749
29,521,574
988,680
24,075
3,076,831
171,552
(649,773)
23,897,922
2,012,287
420,694,262
398,000
2,077,508
548,125
3,120,470
605,434
188,708
363,548
1,635,380
20,047,967
8,598,196
60,684
340,511,249
15,542,432
5,449
6,868,114
$ 20,122,998
Amount
-
2
5
100
7
1
6
1
-
5
-
93
1
-
-
4
2
75
4
%
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
YEARS ENDED DECEMBER 31, 2014 AND 2013
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
2014
Amount
INTEREST REVENUE (Notes 4 and 29)
INTEREST EXPENSE (preferred stock interest
expense included was both $130,000 thousand for
the years ended December 31, 2014 and 2013, Notes
4, 25, 29 and 43)
Net interest
REVENUES AND GAINS OTHER THAN
INTEREST, NET
Commission and fee revenues, net (Notes 4 and 30)
Gains from financial assets and liabilities at fair
value through profit or loss, net (Notes 4, 8 and
43)
Realized gains from available-for-sale financial
assets (Notes 4 and 10)
Foreign exchange gain (loss) , net (Notes 4 and 31)
Impairment loss on assets (reversal) (Notes 4, 10, 14,
16 and 18)
Other net gains (Notes 4, 14, 18 and 32)
Loss on redeemed convertible financial debentures
(Note 23)
Net revenues and gains other than interest
9,483,766
92
4,097,623
$
%
8,832,701
89
40
4,053,714
41
5,386,143
52
4,778,987
48
2,902,314
28
2,704,829
27
1,714,361
17
2,495,063
25
131,933
193,280
1
2
43,332
(193,310)
8,475
82,066
1
(5,129)
50,538
(127,182)
(1)
1
(2)
1
-
-
4,905,247
48
5,095,323
52
10,291,390
100
9,874,310
100
PROVISION FOR CREDIT LOSSES (Notes 4, 5, 11,
12 and 43)
481,951
5
721,177
7
OPERATING EXPENSES (Notes 4, 5, 15, 16, 17, 27,
28, 33, 34, 35, 39 and 43)
Employee benefit expense
Depreciation and amortization
Other general and administrative expenses
3,847,453
380,144
2,309,384
37
4
22
3,585,006
362,907
2,103,748
36
4
21
6,536,981
63
6,051,661
61
3,272,458
32
3,101,472
32
TOTAL NET REVENUES
Total operating expenses
PROFIT BEFORE INCOME TAX
INCOME TAX EXPENSE (Notes 4, 5 and 36)
176
$
2013
Amount
%
(505,519)
(5)
(362,376)
(4)
(Continued)
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
2014
Amount
NET PROFIT FOR THE YEAR
$
OTHER COMPREHENSIVE INCOME (Notes 4, 25,
27 and 36)
Exchange differences on translating foreign
operations
Unrealized gain on available-for-sale financial assets
Cash flow hedges
Actuarial loss on defined benefit plans
Income tax relating to the components of other
comprehensive income
Other comprehensive income for the year, net
of income tax
2,766,939
2013
Amount
%
27
$
2,739,096
%
28
54,139
49,979
1,270
(47,582)
-
35,343
86,651
2,601
(21,349)
1
-
(1,353)
-
(715)
-
56,453
-
102,531
1
NET COMPREHENSIVE INCOME FOR THE YEAR
$
2,823,392
27
$
2,841,627
29
NET PROFIT ATTRIBUTABLE
Stockholders of the Bank
Non-controlling interests
$
2,635,095
131,844
26
1
$
2,656,315
82,781
27
1
$
2,766,939
27
$
2,739,096
28
$
2,698,162
125,230
26
1
$
2,735,156
106,471
28
1
$
2,823,392
27
$
2,841,627
29
$
$
1.04
0.89
$
$
1.06
0.86
TO
TOTAL COMPREHENSIVE INCOME
ATTRIBUTABLE TO
EARNINGS PER SHARE
Basic (Note 37)
Diluted (Note 37)
(Concluded)
177
178
-
-
-
Total comprehensive income for the year ended December
31, 2014
Change in non-controlling interests
70,871
$
-
-
2,024,572
-
-
43,798
-
-
1,980,774
25,805,739
4,605
34,753
-
-
BALANCE AT DECEMBER 31, 2014
-
1,887,229
20,588
-
-
31,513
23,897,922
Appropriation of 2013 earnings
Legal reserve
Stock dividends of common stock - $0.8 per share
Stock dividends of preferred stock - $0.11 per share
Buy-back of common stock
Gain on disposal of the Bank's shares held by subsidiaries
accounted for as treasury stock transactions
Recognition of employee share options by the Bank
Net profit for the year ended December 31, 2014
Other comprehensive income (loss) for the year ended
December 31, 2014, net of income tax
$
-
$
-
-
Total comprehensive income for the year ended December
31, 2013
-
108
49,964
-
25,856
-
1,930,702
4,721
$
-
936
-
$
-
1,420,188
-
22,477,734
-
$
Capital Surplus
Treasury Stock
Transactions
Others
BALANCE AT JANUARY 1, 2013
Appropriation of 2012 earning
Legal reserve
Reversal of special reserve
Excess of the consideration paid over the carrying amount of the
subsidiaries' net assets
Capital
Common Stock
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In Thousands of New Taiwan Dollars, Except Dividends Per Share)
$
$
1,785,575
-
-
-
796,895
-
988,680
-
-
-
-
519,378
-
469,302
Legal Reserve
$
$
24,075
-
-
-
-
24,075
-
-
-
-
(342,763)
(342,763)
366,838
Special Reserve
Retained Earnings
$
$
2,965,796
2,593,677
-
(41,418
(41,418))
2,635,095
(796,895)
(796,895)
(1,887,229)
(1,887,229)
(20,588)
(20,588)
-
3,076,831
2,633,071
(23,244
(23,244))
2,656,315
-
(519,378)
(519,378)
(1,420,188)
(1,420,188)
342,763
2,040,563
Undistributed
Earnings
$
$
19,431
44,914
-
44,914
-
-
(25,483
(25,483))
31,442
31,442
-
-
-
(56,925)
(56,925)
Exchange
Differences on
Translating
Foreign
Operations
Equity Attributable to Stockholders of the Bank
Other Equity
$
$
260,075
58,518
-
58,518
-
-
201,557
68,484
68,484
-
-
-
133,073
Unrealized Gain
on Available-for
-sale Financial
Assets
$
$
(3,469)
(3,469)
1,053
-
1,053
-
-
(4,522
(4,522))
2,159
2,159
-
-
-
(6,681))
(6,681
Cash Flow
Hedges
$
$
(348,878)
(348,878)
-
-
16,568
288,304
-
(3,977))
(3,977
(649,773
(649,773))
-
-
144,309
-
21,207
-
(815,289))
(815,289
Treasury Shares
$
$
32,603,787
2,698,162
-
63,067
21,173
366,855
2,635,095
(3,977))
(3,977
29,521,574
2,735,156
78,841
108
220,129
2,656,315
25,928
-
26,540,253
Total
$
$
3,147,670
125,230
(139,309
(139,309))
(6,614
(6,614))
131,844
-
3,161,749
106,471
23,690
(218))
(218
82,781
-
-
3,055,496
Non-controlling
Interests
$
35,751,457
2,823,392
(139,309
(139,309))
56,453
21,173
366,855
2,766,939
(3,977)
(3,977)
32,683,323
2,841,627
102,531
(110))
(110
220,129
2,739,096
25,928
-
29,595,749
Total Equity
$
CONSOLIDATED STATEMENTS OF CASH FLOWS
2014
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before income tax
Adjustments for
Depreciation
Amortization
Provision for credit losses
Net gain on financial assets and liabilities at fair value through profit
or loss
Interest expense
Interest revenue
Dividend income
Provision for loss on guarantees
Net changes in other provisions
Compensation cost of employee share options
Loss (gain) on disposal of properties and equipment
Loss on disposal of other assets
Gain on disposal of investments
Loss on disposal of subsidiaries
Impairment loss recognized on financial assets
(Reversal of) impairment loss recognized on non-financial assets
Unrealized foreign exchange losses
Loss on redeemed convertible financial debentres
Gains on disposal of collaterals assumed
Others
Net changes in operating assets and liabilities
Due from the Central Bank and call loans to other banks
Financial assets at fair value through profit or loss
Receivables
Discounts and loans
Available-for-sale financial assets
Other assets
Due to the Central Bank and call loans to other banks
Financial liabilities at fair value through profit or loss
Payables
Provisions
Other liabilities
Interest received
Dividend received
Interest paid
Income tax paid
$
3,272,458
89,979
290,165
527,048
2013
$
3,101,472
106,820
256,087
718,112
(724,260)
4,097,623
(9,483,766)
(57,474)
(45,098)
38,741
43,798
200
1,613
(132,617)
20
1,765
(10,240)
549,286
127,182
(51,923)
2,043
(1,514,252)
4,053,714
(8,832,701)
(51,539)
3,065
77,829
49,964
(38,973)
3,986
(9,480)
188
4,941
(9,071)
(773)
7,139,420
(3,743,097)
(1,410,621)
(24,035,795)
48,085
(55,858)
(2,120,069)
993,540
(632,985)
3,079,603
(61,370)
(37,961)
666,903
9,765,582
39,486
(4,002,567)
(117,732)
(5,875,064)
(4,827,153)
(2,231,527)
13,753,416
(112,595)
(244,887)
(1,657,198)
215,440
881,966
(2,919,003)
79,213
(34,267)
174,881
8,766,883
88,387
(4,209,284)
(87,603)
Net cash used in operating activities
(15,948,893)
(319,006)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of available-for-sale financial assets
(781,992,213)
(890,638,336)
(Continued)
179
Proceeds from disposal of available-for-sale financial assets
Purchase of debt investments with no active market
Purchase of financial assets measured at cost
Proceeds from disposal of financial assets measured at cost
Return of investment of financial assets measured at cost due to capital
reduction
Payments for property and equipment
Proceeds from disposal of property and equipment
Decrease in operating deposits
Decrease in clearing and settlement fund
Increase in refundable deposits
Payments for intangible assets
Proceeds from disposal of collaterals assumed
Other financial assets
Increase in miscellaneous assets
Proceeds from disposal of other deferred assets
Interest received
Dividend received
Decrease in restricted assets
Net cash generated from (usid in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term borrowings
Proceeds from (repayment of) commercial paper payable
Repayments of bonds payable
Proceeds from issuance of financial debentures
Repayments of financial debentures
Proceeds from long-term borrowings
Repayment of long-term borrowings
Increase in securities sold under agreements to repurchase
Decrease in securities sold under agreements to repurchase
Proceeds from guarantee deposits received
Increase in other financial liabilities
Dividend paid
Proceeds from reissue of treasury shares
Employee buy-back of treasury shares
Acquisition of non-controlling interest in subsidiaries
Interest paid
Change in non-controlling interests
Finance expenses
Net cash generated from (used in) financing activities
2014
2013
$ 793,360,205
(10,058,228)
(52,000)
1,415
$ 895,801,820
(839,688)
(61)
63,779
10,870
(159,906)
35
10,000
13,071
(3,602,544)
(73,469)
62,163
58,115
(105,198)
456
413
17,990
-
(228,292)
97,433
18,046
(78,333)
(48,157)
19,110
108
(79,505)
17,550
64,000
(2,508,825)
270,400
(577,000)
15,516,100
(7,500,000)
540,353,674
(541,911,738)
12,900
4,677,243
(56,127)
60,724
323,057
(1,742)
(83,182)
(5,307)
11,079,002
4,169,474
309,000
490,208
(6,000)
547,250
(500,000)
608,369,125
(610,382,801)
10,400
537,330
74,361
170,165
(110)
(381,072)
(Continued)
180
2014
EFFECT OF EXCHANGE RATE CHANGES ON THE BALANCE OF
CASH HELD IN FOREIGN CURRENCIES
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS
$
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE
YEAR
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
$
358,050
2013
$
(80,499)
(7,020,666)
3,388,897
14,857,618
11,468,721
7,836,952
$ 14,857,618
(Concluded)
Reconciliation of the amounts in the consolidated statements of cash flows with the equivalent items reported in
the consolidated balance sheets at December 31, 2014 and 2013:
2014
Cash and cash equivalents in consolidated balance sheets
Due from the Central Bank and call loans to other banks in accordance
with cash and cash equivalents under IAS 7
Securities purchased under agreements to resell in accordance with cash
and cash equivalents under IAS 7
$
Cash and cash equivalents in consolidated statements of cash flows
$
2013
4,504,378
$ 11,499,051
1,361,165
837,900
1,971,409
2,520,667
7,836,952
$ 14,857,618
181
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)
ġ 1. GENERAL INFORMATION
Ta Chong Bank Ltd. (the “Bank”) commenced its operations in April, 1992. To comply with the
government’s policy for consolidating the monetary industry, the Bank acquired and merged Polyvest Bills
Finance Ltd. (PBFL) on May 29, 2001. Also, approved by the Financial Supervisory Commission (FSC)
on August 20, 2009, the Bank on September 1, 2009, the acquisition date, acquired the assets, liabilities and
operations of the Kaohsiung Second Credit Cooperative (KSCC). The KSCC was established in January
1914 for the purpose of engaging in savings, loans, and other businesses as approved by the government.
Based on the acquisition contract, the KSCC retained part of the assets and liabilities and completed the
liquidation process by itself in accordance with relevant regulations. The Bank is now engaged in savings,
loans, guarantee, trust operations, sales agency of government bonds, corporate bonds, dealing of
government bonds, transacting of derivative financial instruments, treasury management and other
businesses as approved by the government. The operations of the Bank’s Trust Department consist of:
(1) full fiduciary discretionary investment; (2) planning, managing and operating of investing business; and
(3) trust business of investing in overseas securities and mutual funds.
As of December 31, 2014, the Bank’s operating units include banking, trust, international division of the
head office, offshore banking unit (OBU), Hong Kong branch and 66 domestic branches. The Hong Kong
branch, the establishment of overseas branch in Hong Kong was approved by the Hong Kong Monetary
Authority (HKMA) on March 10, 2014, and was in operation since October 16, 2014.
The Bank’s common stocks have been traded in the Taiwan Stock Exchange (TSE) with code 2847.
The consolidated financial statements are presented in the Bank’s functional currency, New Taiwan Dollars
(NT$).
ġ 2. APRROVAL OF FINANCIAL STATEMENTS
The consolidated financial statements were approved by the board of directors of the Bank (the “Board”)
and authorized for issue on March 26, 2015.
3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS
a. The amendments to the Regulations Governing the Preparation of Financial Reports by Public Banks,
Regulations Governing the Preparation of Financial Reports by Securities Firms, Regulations
Governing the Preparation of Financial Reports by Futures Commission Merchants and the 2013
version of the International Financial Reporting Standards (IFRS), International Accounting Standards
(IAS), Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC) endorsed by the FSC not yet
effective
Rule No. 10310006010, Rule No. 1030034680 and Rule No. 1030010325 issued by the FSC in 2014,
stipulated that the Bank and subsidiaries should apply the 2013 version of IFRS, IAS, IFRIC and SIC
(collectively, the “IFRSs”) endorsed by the FSC and the related amendments adopted by the
consolidated financial statements starting January 1, 2015.
182
New, Amended and Revised
Standards and Interpretations (the “2013 IFRSs”)
Effective Date
Announced by IASB (Note)
Improvements to IFRSs (2009) - amendment to IAS 39
January 1, 2009 and January 1,
2010, as appropriate
Effective for annual periods
Amendment to IAS 39 “Embedded Derivatives”
ended on or after June 30,
2009
Improvements to IFRSs (2010)
July 1, 2010 and January 1,
2011, as appropriate
Annual Improvements to IFRSs 2009-2011 Cycle
January 1, 2013
Amendment to IFRS 1 “Limited Exemption from Comparative IFRS 7 July 1, 2010
Disclosures for First-time Adopters”
Amendment to IFRS 1 “Severe Hyperinflation and Removal of Fixed July 1, 2011
Dates for First-time Adopters”
Amendment to IFRS 1 “Government Loans”
January 1, 2013
Amendment to IFRS 7 “Disclosure - Offsetting Financial Assets and
January 1, 2013
Financial Liabilities”
Amendment to IFRS 7 “Disclosure - Transfer of Financial Assets”
July 1, 2011
IFRS 10 “Consolidated Financial Statements”
January 1, 2013
IFRS 11 “Joint Arrangements”
January 1, 2013
IFRS 12 “Disclosure of Interests in Other Entities”
January 1, 2013
January 1, 2013
Amendments to IFRS 10, IFRS 11 and IFRS 12 “Consolidated
Financial Statements, Joint Arrangements and Disclosure of
Interests in Other Entities: Transition Guidance”
Amendments to IFRS 10 and IFRS 12 and IAS 27 “Investment
January 1, 2014
Entities”
IFRS 13 “Fair Value Measurement”
January 1, 2013
Amendment to IAS 1 “Presentation of Other Comprehensive Income” July 1, 2012
Amendment to IAS 12 “Deferred Tax: Recovery of Underlying
January 1, 2012
Assets”
IAS 19 (Revised 2011) “Employee Benefits”
January 1, 2013
IAS 28 (Revised 2011) “Investments in Associates and Joint
January 1, 2013
Ventures”
Amendment to IAS 32 “Offsetting Financial Assets and Financial
January 1, 2014
Liabilities”
IFRIC 20 “Stripping Costs in Production Phase of a Surface Mine”
January 1, 2013
Note:
Unless stated otherwise, the above 2013 IFRSs are effective for annual periods beginning on or
after the respective effective dates.
Except for the following, whenever applied, the initial application of the above 2013 IFRSs version and
the related amendments adopted by the consolidated financial statements would not have any material
impact on the Bank and subsidiaries’ accounting policies:
1) IFRS 12 “Disclosure of Interests in Other Entities”
IFRS 12 is a new disclosure standard and is applicable to entities that have interests in subsidiaries,
joint arrangements, associates and/or unconsolidated structured entities. In general, the disclosure
requirements in IFRS 12 are more extensive than in the current standards.
2) IFRS 13 “Fair Value Measurement”
IFRS 13 establishes a single source of guidance for fair value measurements. It defines fair value,
establishes a framework for measuring fair value, and requires disclosures about fair value
measurements. The disclosure requirements in IFRS 13 are more extensive than those required in
183
the current standards. For example, quantitative and qualitative disclosures based on the
three-level fair value hierarchy currently required for financial instruments only will be extended by
IFRS 13 to cover all assets and liabilities within its scope.
The fair value measurements under IFRS 13 will be applied prospectively from January 1, 2015.
3) Amendments to IAS 1 “Presentation of Items of Other Comprehensive Income (OCI)”
The amendments to IAS 1 requires items of OCI to be grouped into those items that (1) will not be
reclassified subsequently to profit or loss; and (2) may be reclassified subsequently to profit or loss.
Income taxes on related items of OCI are grouped on the same basis. Under current IAS 1, there
were no such requirements.
The Bank and subsidiaries will retrospectively apply the above amendments starting from 2015.
Items not expected to be reclassified to profit or loss are measurements of the defined benefit plans
and related income tax. Items expected to be reclassified to profit or loss are the exchange
differences on translating foreign operations, unrealized gains (loss) on available-for-sale (AFS)
financial assets and cash flow hedges. However, the application of the above amendments will not
result in any impact on the net profit for the year, OCI for the year (net of income tax), and total
comprehensive income for the year.
4) Revision to IAS 19 “Employee Benefits”
Revised IAS 19 requires the recognition of changes in defined benefit obligations and in the fair
value of plan assets when they occur, and hence eliminates the “corridor approach” permitted under
current IAS 19 and accelerate the recognition of past service costs. The revision requires all
measurements of the defined benefit plans to be recognized immediately through OCI in order for
the net pension asset or liability to reflect the full value of the plan deficit or surplus.
Furthermore, the interest cost and expected return on plan assets used in current IAS 19 are replaced
with a “net interest” amount, which is calculated by applying the discount rate to the net defined
benefit liability or asset. In addition, the revised IAS 19 introduces certain changes in the
presentation of the defined benefit cost, and also includes more extensive disclosures.
On initial application of the revised IAS 19 in 2015, the changes in cumulative employee benefit
costs as of December 31, 2013 resulting from the retrospective application are adjusted to
Provisions for employee benefits, deferred tax assets and retained earnings. In addition, in
preparing the consolidated financial statements for the year ended December 31, 2015, the Bank
and subsidiaries would elect not to present 2014 comparative information about the sensitivity of
the defined benefit obligation.
The anticipated impact of the initial application of the revised IAS 19 is detailed as follows:
Carrying
Amount
Adjustments
Arising from
Initial
Application
Adjusted
Carrying
Amount
Impact on assets, liabilities and equity
December 31, 2014
Total effect on assets - deferred income
tax assets
184
$
1,891,206
$
(3,864)
$
1,887,342
(Continued)
Carrying
Amount
Total effect on liabilities - provision for
employee benefits
Total effect on equity
Adjustments
Arising from
Initial
Application
Adjusted
Carrying
Amount
$
284,767
$ 2,965,796
$ 3,147,670
$ 35,751,457
$
$
$
$
(22,731)
16,624
2,243
18,867
$
262,036
$ 2,982,420
$ 3,149,913
$ 35,770,324
$
2,395,832
$
(4,312)
$
244,320
$ 3,076,831
$ 3,161,749
$ 32,683,323
$
$
$
$
(25,364)
18,642
2,410
21,052
$
218,956
$ 3,095,473
$ 3,164,159
$ 32,704,375
$ (3,847,453)
$
(505,519)
$
$
(3,481)
592
$ (3,850,934)
$
(504,927)
$
$
(2,889)
$
January 1, 2014
Total effect on assets - deferred income
tax assets
Total effect on liabilities - provision for
employee benefits
Total effect on equity
$
2,391,520
Impact on total comprehensive
income for the year ended
December 31, 2014
Income tax expense
Total effect on net profit (after tax) for the
period
Items that will not be reclassified to profit
or loss:
Remeasurements of defined benefit
plan
Income tax relating to items that will
not be reclassified
Total comprehensive income for the year
2,764,050
$
(47,582)
$
848
$
(46,734)
$
8,089
(39,493)
$
(144)
704
$
7,945
(38,789)
$
(2,185)
$
$
Net profit attributable to:
Total comprehensive income attributable
to:
2,766,939
2,823,392
2,635,095
131,844
(2,997)
108
2,821,207
2,632,098
131,952
$
2,766,939
$
(2,889)
$
2,764,050
$
2,698,162
125,230
$
(2,018)
(167)
$
2,696,144
125,063
$
2,823,392
$
(2,185)
$
2,821,207
(Concluded)
185
5) Recognition and measurement of financial liabilities designated as at fair value through profit
f or
loss (FVTPL)
In accordance with the amendments to the Regulations Governing the Preparation of Financial
Reports by Public Banks, for financial liabilities designated as at FVTPL, the amount of change in
the fair value attributable to changes in the credit risk of that liability is presented in OCI and the
remaining amount of change in the fair value of that liability is presented in profit or loss.
Changes in fair value attributable to a financial liability's credit risk are not subsequently
reclassified to profit or loss. If the above accounting treatment would create or enlarge an
accounting mismatch, all gains or losses on that liability are presented in profit or loss.
The Bank and subsidiaries had issued subordinated financial debentures and designated the
financial liabilities as at FVTPL. Upon application of the above amendments, as of January 1,
2015, the anticipated impact is a decrease in retained earnings and an increase in other equity by
$2,891 thousand.
b. New IFRSs in issue but not yet endorsed by the FSC
The Bank and subsidiaries have not applied the following New IFRSs issued by the IASB but not yet
endorsed by the FSC. As of the date the consolidated financial statements were authorized for issue,
the FSC has not announced their effective dates.
New IFRSs
Effective Date
Announced by IASB (Note 1)
IFRS 9 “Financial Instruments”
Amendments to IFRS 9 and IFRS 7 “Mandatory Effective Date of
IFRS 9 and Transition Disclosures”
Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets
between an Investor and its Associate or Joint Venture”
July 1, 2014 (Note 2)
July 1, 2014
January 1, 2016 (Note 4)
January 1, 2018
January 1, 2018
Amendments to IFRS 10, IFRS 12 and IAS 28“'Investment Entities:
Applying the Consolidation Exception”
Amendment to IFRS 11 “ Accounting for Acquisitions of Interests in
Joint Operations”
IFRS 14 “Regulatory Deferral Accounts”
IFRS 15 “Revenue from Contracts with Customers”
Amendment to IAS 1 “Disclosure Initiative”
Amendments to IAS 16 and IAS 38 “Clarification of Acceptable
Methods of Depreciation and Amortization”
Amendments to IAS 16 and IAS 41 “Agriculture: Bearer Plants”
Amendment to IAS 19 “Defined Benefit Plans: Employee
Contributions”
Amendment to IAS 36 “Impairment of Assets: Recoverable Amount
Disclosures for Non-financial Assets”
Amendment to IAS 39 “Novation of Derivatives and Continuation of
Hedge Accounting”
IFRIC 21 “Levies”
January 1, 2016
January 1, 2016 (Note 3)
January 1, 2016
January 1, 2016
January 1, 2017
January 1, 2016
January 1, 2016
January 1, 2016
July 1, 2014
January 1, 2014
January 1, 2014
January 1, 2014
Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on
or after their respective effective dates.
186
Note 2: The amendment to IFRS 2 applies to share-based payment transactions with grant date on or
after July 1, 2014; the amendment to IFRS 3 applies to business combinations with acquisition
date on or after July 1, 2014; the amendment to IFRS 13 is effective immediately; the
remaining amendments are effective for annual periods beginning on or after July 1, 2014.
Note 3: Prospectively applicable to transactions occurring in annual periods beginning on or after
January 1, 2016.
Note 4: The amendment to IFRS 5 is applied prospectively to changes in a method of disposal that
occur in annual periods beginning on or after January 1, 2016; the remaining amendments are
effective for annual periods beginning on or after January 1, 2016.
The initial application of the above New IFRSs, whenever applied, would not have any material impact
on the Bank and subsidiaries’ accounting policies, except for the following:
1) IFRS 9 “Financial Instruments”
Recognition and measurement of financial assets
With regards to financial assets, all recognized financial assets that are within the scope of IAS 39
“Financial Instruments: Recognition and Measurement” are subsequently measured at amortized
cost or fair value. Under IFRS 9, the requirement for the classification of financial assets is stated
below.
For the Bank and subsidiaries’ debt instruments that have contractual cash flows that are solely
payments of principal and interest on the principal amount outstanding, their classification and
measurement are as follows:
a) For debt instruments, if they are held within a business model whose objective is to collect the
contractual cash flows, the financial assets are measured at amortized cost and are assessed for
impairment continuously with impairment loss recognized in profit or loss, if any. Interest
revenue is recognized in profit or loss by using the effective interest method.
b) For debt instruments, if they are held within a business model whose objective is achieved by
both the collecting of contractual cash flows and the selling of financial assets, the financial
assets are measured at fair value through other comprehensive income (FVTOCI) and are
assessed for impairment. Interest revenue is recognized in profit or loss by using the effective
interest method, and other gain or loss shall be recognized in OCI, except for impairment gains
or losses and foreign exchange gains and losses. When the debt instruments are derecognized
or reclassified, the cumulative gain or loss previously recognized in OCI is reclassified from
equity to profit or loss.
Except for above, all other financial assets are measured at FVTPL. However, the Bank and
subsidiaries may make an irrevocable election to present subsequent changes in the fair value of an
equity investment (that is not held for trading) in OCI, with only dividend income generally
recognized in profit or loss. No subsequent impairment assessment is required, and the cumulative
gain or loss previously recognized in OCI cannot be reclassified from equity to profit or loss.
The impairment of financial assets
IFRS 9 requires that impairment loss on financial assets is recognized by using the “Expected Credit
Losses Model”. The credit loss allowance is required for financial assets measured at amortized
cost, financial assets mandatorily measured at FVTOCI, lease receivables, contract assets arising
from IFRS 15 “Revenue from Contracts with Customers”, certain written loan commitments and
financial guarantee contracts. A loss allowance for the 12-month expected credit losses is required
for a financial asset if its credit risk has not increased significantly since initial recognition. A loss
187
allowance for full lifetime expected credit losses is required for a financial asset if its credit risk has
increased significantly since initial recognition and is not low. However, a loss allowance for full
lifetime expected credit losses is required for trade receivables that do not constitute a financing
transaction.
For purchased or originated credit-impaired financial assets, the Bank and subsidiaries take into
account the expected credit losses on initial recognition in calculating the credit-adjusted effective
interest rate. Subsequently, any changes in expected losses are recognized as a loss allowance
with a corresponding gain or loss recognized in profit or loss.
Hedge accounting
The main changes in hedge accounting amended the application requirements for hedge accounting
to better reflect the entity’s risk management activities. Compared with IAS 39, the main changes
include: (1) enhancing types of transactions eligible for hedge accounting, specifically broadening
the risk eligible for hedge accounting of non-financial items; (2) changing the way hedging
derivative instruments are accounted for to reduce profit or loss volatility; and (3) replacing
retrospective effectiveness assessment with the principle of economic relationship between the
hedging instrument and the hedged item.
2) Amendment to IAS 1 “Disclosure Initiative”
The amendment clarifies that the consolidated financial statements should be prepared for the
purpose of disclosing material information. To improve the understandability of its consolidated
financial statements, the Bank and subsidiaries should disaggregate the disclosure of material items
into their different natures or functions, and disaggregate material information from immaterial
information.
The amendment further clarifies that the Bank and subsidiaries should consider the
understandability and comparability of its consolidated financial statements to determine a
systematic order in presenting its footnotes.
3) Amendment to IAS 36 “Recoverable Amount Disclosures for Non-financial Assets”
In issuing IFRS 13 “Fair Value Measurement”, the IASB made consequential amendment to the
disclosure requirements in IAS 36 “Impairment of Assets”, introducing a requirement to disclose in
every reporting period the recoverable amount of an asset or each cash-generating unit. The
amendment clarifies that such disclosure of recoverable amounts is required only when an
impairment loss has been recognized or reversed during the period. Furthermore, the Bank and
subsidiaries are required to disclose the discount rate used in measurements of the recoverable
amount based on fair value less costs of disposal measured using a present value technique.
4) IFRIC 21 “Levies”
IFRIC 21 provides guidance on when to recognize a liability for a levy imposed by a government.
It addresses the accounting for a liability whose timing and amount is certain and the accounting for
a provision whose timing or amount is not certain. The Bank and subsidiaries accrue related
liability when the transaction or activity that triggers the payment of the levy occurs. Therefore, if
the obligating event occurs over a period of time (such as generation of revenue over a period of
time), the liability is recognized progressively. If an obligation to pay a levy is triggered upon
reaching a minimum threshold (such as a minimum amount of revenue or sales generated), the
liability is recognized when that minimum threshold is reached.
188
5) Annual Improvements to IFRSs:
2010-2012 Cycle
Several standards including IFRS 2 “Share-based Payment”, IFRS 3 “Business Combinations” and
IFRS 8 “Operating Segments” were amended in this annual improvement.
The amended IFRS 2 changes the definitions of “vesting condition” and “market condition” and
adds definitions for “performance condition” and “service condition”. The amendment clarifies
that a performance target can be based on the operations (i.e. a non-market condition) of the Bank
and subsidiaries or another entity in the same group or the market price of the equity instruments of
the Bank and subsidiaries or another entity in the same group (i.e. a market condition); that a
performance target can relate either to the performance of the Bank and subsidiaries as a whole or to
some part of it (e.g. a division); and that the period for achieving a performance condition must not
extend beyond the end of the related service period. In addition, a share market index target is not
a performance condition because it not only reflects the performance of the Bank and subsidiaries,
but also of other entities outside the Bank and subsidiaries.
IFRS 3 was amended to clarify that contingent consideration should be measured at fair value,
irrespective of whether the contingent consideration is a financial instrument within the scope of
IFRS 9 or IAS 39. Changes in fair value should be recognized in profit or loss.
The amended IFRS 8 requires an entity to disclose the judgments made by management in applying
the aggregation criteria to operating segments, including a description of the operating segments
aggregated and the economic indicators assessed in determining whether the operating segments
have “similar economic characteristics”. The amendment also clarifies that a reconciliation of the
total of the reportable segments’ assets to the entity’s assets should only be provided if the
segments’ assets are regularly provided to the chief operating decision-maker.
IFRS 13 was amended to clarify that the issuance of IFRS 13 did not remove the ability to measure
short-term receivables and payables with no stated interest rate at their invoice amounts without
discounting, if the effect of not discounting is immaterial.
IAS 24 was amended to clarify that a management entity providing key management personnel
services to the Bank and subsidiaries are a related party of the Bank and subsidiaries.
Consequently, the Bank and subsidiaries are required to disclose as related party transactions the
amounts incurred for the service paid or payable to the management entity for the provision of key
management personnel services. However, disclosure of the components of such compensation is
not required.
2011-2013 Cycle
Several standards, including IFRS 3, IFRS 13 and IAS 40 “Investment Property”, were amended in
this annual improvement.
IFRS 3 was amended to clarify that IFRS 3 does not apply to the accounting for the formation of all
types of joint arrangements in the financial statements of the joint arrangement itself.
The scope in IFRS 13 of the portfolio exception for measuring the fair value of a group of financial
assets and financial liabilities on a net basis was amended to clarify that it includes all contracts that
are within the scope of, and accounted for in accordance with, IAS 39 or IFRS 9, even if those
contracts do not meet the definitions of financial assets or financial liabilities within IAS 32.
IAS 40 was amended to clarify that IAS 40 and IFRS 3 are not mutually exclusive and application
of both standards may be required to determine whether the investment property acquired is
acquisition of an asset or a business combination.
189
7) Amendments to IFRS 11 “Accounting for Acquisitions of Interests in Joint Operations”
The amendments require that the acquirer of an interest in a joint operation in which the activity
constitutes a business, as defined in IFRS 3, is required to apply all of the principles on business
combinations accounting in IFRS 3 and other IFRSs with the exception of those principles that
conflict with the guidance in IFRS 11. Accordingly, a joint operator that is an acquirer of such an
interest has to:
y Measure most identifiable assets and liabilities at fair value;
y Expense acquisition-related costs (other than debt or equity issuance costs);
y Recognize deferred taxes;
y Recognizing any goodwill or bargain purchase gain;
y Perform impairment tests for the cash generating units to which goodwill has been allocated;
y Disclose information required relevant for business combinations.
The amendments also apply to the formation of a joint operation if, and only if, an existing business
is contributed to the joint operation on its formation by one of the parties that participate in the joint
operation.
The amendments do not apply on the acquisition of an interest in a joint operation when the parties
sharing control are under common control before and after the acquisition.
8) Amendments to IAS 16 and IAS 38 “Clarification of Acceptable Methods of Depreciation and
Amortization”
The entity should use appropriate depreciation and amortization method to reflect the pattern in
which the future economic benefits of the property, and equipment and intangible asset are expected
to be consumed by the entity.
The amended IAS 16 “Property, Plant and Equipment” requires that a depreciation method that is
based on revenue that is generated by an activity that includes the use of an asset is not appropriate.
The amended standard does not provide any exception from this requirement.
The amended IAS 38 “Intangible Assets” requires that there is a rebuttable presumption that an
amortization method that is based on revenue that is generated by an activity that includes the use of
an intangible asset is not appropriate. This presumption can be overcome only in the following
limited circumstances:
a) In which the intangible asset is expressed as a measure of revenue (for example, the contract
that specifies the entity’s use of the intangible asset will expire upon achievement of a revenue
threshold); or
b) When it can be demonstrated that revenue and the consumption of the economic benefits of the
intangible asset are highly correlated.
An entity should apply the aforementioned amendments prospectively for annual periods beginning
on or after the effective date.
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9) IFRS 15 “Revenue from Contracts with Customers”
IFRS 15 establishes principles for recognizing revenue that apply to all contracts with customers,
and will supersedes IAS 18 “Revenue”, IAS 11 “Construction Contracts” and a number of
revenue-related interpretations from January 1, 2017.
When applying IFRS 15, an entity shall recognize revenue by applying the following steps:
y Identify the contract with the customer;
y Identify the performance obligations in the contract;
y Determine the transaction price;
y Allocate the transaction price to the performance obligations in the contracts; and
y Recognize revenue when the entity satisfies a performance obligation.
When IFRS 15 is effective, an entity may elect to apply this Standard either retrospectively to each
prior reporting period presented or retrospectively with the cumulative effect of initially applying
this Standard recognized at the date of initial application.
10) Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture”
The amendments stipulated that, when an entity sells or contributes assets that constitute a business
(as defined in IFRS 3) to an associate or joint venture, the gain or loss resulting from the transaction
is recognized in full. Also, when an entity loses control of a subsidiary that contains a business but
retains significant influence or joint control, the gain or loss resulting from the transaction is
recognized in full.
Conversely, when an entity sells or contributes assets that do not constitute a business to an
associate or joint venture, the gain or loss resulting from the transaction is recognized only to the
extent of the unrelated investors’ interest in the associate or joint venture, i.e. the entity’s share of
the gain or loss is eliminated. Also, when an entity loses control of a subsidiary that does not
contain a business but retains significant influence or joint control in an associate or a joint venture,
the gain or loss resulting from the transaction is recognized only to the extent of the unrelated
investors’ interest in the associate or joint venture, i.e. the entity’s share of the gain or loss is
eliminated.
2012-2014 Cycle
Several standards including IFRS 5 “Non-current assets held for sale and discontinued operations”,
IFRS 7, IAS 19 and IAS 34 were amended in this annual improvement.
IFRS 5 was amended to clarify that reclassification between non-current assets (or disposal group)
“held for sale” and non-current assets “held for distribution to owners” does not constitute a change
to a plan of sale or distribution. Therefore, previous accounting treatment is not reversed. The
amendment also explains that assets that no longer meet the criteria for “held for distribution to
owners” and do not meet the criteria for “held for sale” should be treated in the same way as assets
that cease to be classified as held for sale.
The amendments to IFRS 7 provide additional guidance to clarify whether a servicing contract is
continuing involvement in a transferred asset.
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Except for the above impact, as of the date the consolidated financial statements were authorized for
issue, the Bank and subsidiaries are continuously assessing the possible impact that the application
of other standards and interpretations will have on the Bank and Subsidiaries, financial position and
financial performance, and will disclose the relevant impact when the assessment is completed.
ġ 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Statement of Compliance
The consolidated financial statements have been prepared in accordance with the Regulations
Governing the Preparation of Financial Reports by Public Banks, Regulations Governing the
Preparation of Financial Reports by Securities Firms, Regulations Governing the Preparation of
Financial Reports by Futures Commission Merchants and IFRSs as endorsed by the FSC.
b. Basis of Preparation
The consolidated financial statements have been prepared on the historical cost basis except for
financial instruments that are measured at fair values. Historical cost is generally based on the fair
value of the consideration given in exchange for assets.
c. Classification of Current and Non-current Assets and Liabilities
The Bank and subsidiaries’ assets and liabilities are not classified into current and non-current in the
consolidated balance sheet, as the nature of banking industry involves uncertain business operating
cycles. However, the assets and liabilities are presented according to their liquidity.
d. Basis of Consolidation
1) Principles for preparing consolidated financial statements
The consolidated financial statements incorporate the financial statements of the Bank and the
entities controlled by the Bank (its subsidiaries).
Income and expenses of subsidiaries acquired or disposed of during the period are included in the
consolidated statement of profit or loss and OCI from the effective date of acquisition up to the
effective date of disposal, as appropriate.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their
accounting policies into line with those used by the Bank.
All intra-group transactions, balances, income and expenses are eliminated in full upon
consolidation.
Attribution of total comprehensive income to non-controlling interests
Total comprehensive income of subsidiaries is attributed to the stockholders of the Bank and to the
non-controlling interests even if this results in the non-controlling interests having a deficit balance.
Changes in the Bank and subsidiaries’ ownership interests in existing subsidiaries
Changes in the Bank and subsidiaries’ ownership interests in subsidiaries that do not result in the
Bank and subsidiaries losing control over the subsidiaries are accounted for as equity transactions.
The carrying amounts of the Bank and subsidiaries’ interests and the non-controlling interests are
adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference
between the amount by which the non-controlling interests are adjusted and the fair value of the
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consideration paid or received is recognized directly in equity and attributed to the stockholders of
the Bank.
2) Subsidiary included in consolidated financial statements
Investor
Ta Chong Bank (the Bank)
Investee
Ta Chong Securities (TCSC)
Main Businesses
Brokerage, dealing and
underwriting of securities and
futures commission merchants
Leasing and installment sales
Ta Chong International Finance
& Investment (TCIFI)
Ta Chong Life Insurance Agency Life insurance agent
(TCLIA)
Property insurance agent
Agency (TCGIA)
Ta Chong Finance (Hong Kong) Financial consulting
Limited (TCF HK)
TCSC
Ta Chong Futures (TCFC)
TCSC
Ta Chong Venture Capital
(TCVC)
Futures exchanges and
transactions
Investment
% of Ownership
December
December
31, 2014
31, 2013
34.9
34.9
100
100
100
100
100
100
100
100
-
78.5
100
100
a) TCSC and its subsidiaries
u
i.
TCSC, formerly named Dong Lian Securities, was established in July 1989 and commenced
its operations in security brokerage in October of the same year. On September 2, 1997,
Dong Lian Securities merged XinYing Securities and changed its name to Ta Chong
Securities. As of December 31, 2014, TCSC had 15 branches.
TCSC’s common stocks have been traded in the GreTai Securities Market since September
2005 with code 6022. The Bank is the major shareholder of TCSC and has substantial
controlling power over TCSC.
ii. TCFC was invested and established by TCSC with cost of $120,000 thousand for 30%
shareholding in December 2008. TCFC is mainly engaged in futures dealing business.
From December 2011 to January 31, 2012, TCSC additionally acquired 20,487 thousand
shares from TCFC’s other stockholders; therefore, TCSC’ original investment amount and
stockholding in TCFC increased to $364,882 thousand for 33,163 thousand shares
representing 78% shareholding.
In view of the environment of international finance and considering the operating costs and
its equity, the board of directors of TCSC approved to close TCFC’s operation in August
2013, and the FSC approved the closure in October 2013; therefore, TCSC recognized
impairment loss of $1,533 thousand. TCFC has been liquidated in August 2014.
iii. TCVC was invested and established by TCSC with capital of $2 hundred million for 100%
shareholding in December 2013. TCVC is engaged in investment and management
consulting.
b) In March 2013, the Bank additionally acquired 92 thousand shares with cost of $110 thousand
from TCIFI’s other stockholders; as of December 31, 2014, the Bank’s original investment
amount and common stockholding in TCIFI increased to $865,653 thousand for 52,256
thousand shares, and the shareholding is 100%.
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c) TCF HK was established in January 2006, and it is mainly engaged in financial consulting
service.
In June 2012, the Board approved of additional investment in TCF HK with $359,766 thousand
(HK$93,000 thousand) and the FSC approved the investment in July 2012.
As of December 31, 2014, the total investment amount in TCF HK aggregated to $483,246
thousand (HK$123,000 thousand).
In view of achieving its short-term mission and managing purpose, on May 23, 2014, the Board
approved to close TCF HK’s operation and dissolve. TCF HK’s dissolution was announced by
the government of Hong Kong on January 23, 2015.
d) TCLIA and TCGIA was invested and established by the Bank in February 2001 and February
2006, separately, with cost of $3,000 thousand for each company.
e. Business Combination
Acquisitions of businesses are accounted for using the acquisition method.
are generally recognized in profit or loss as incurred.
Acquisition-related costs
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any
non-controlling interests in the acquired company, and the fair value of the acquirer’s previously held
equity interest in the acquired company’s over the net of the acquisition-date amounts of the identifiable
assets acquired and the liabilities assumed.
Non-controlling interests are initially measured at the non-controlling interests’ proportionate share of
the fair value of the acquirer’s identifiable net assets.
f. Foreign Currencies
In preparing the financial statements of each individual group entity, transactions in currencies other
than the entity’s functional currency (foreign currencies) are recognized at the rates of exchange
prevailing at the dates of the transactions.
At the end of each reporting period, monetary items denominated in foreign currencies are retranslated
at the rates prevailing at that date. Exchange differences on monetary items arising from settlement or
translation are recognized in profit or loss in the period.
Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated
at the rates prevailing at the date when the fair value was determined. Exchange differences arising on
the retranslation of non-monetary items are included in profit or loss for the period except for exchange
differences arising from the retranslation of non-monetary items in respect of which gains and losses are
recognized directly in OCI, in which case, the exchange differences after deducting tax effects are also
recognized directly in OCI.
Non-monetary items that are measured at historical cost in a foreign currency are not retranslated.
For the purposes of presenting consolidated financial statements, the assets and liabilities of the Bank
and subsidiaries’ foreign operations (including of the subsidiaries that used currencies other than New
Taiwan dollars, the currency used by the Bank) are translated into New Taiwan dollars using exchange
rates prevailing at the end of each reporting period. Income and expense items are translated at the
average exchange rates for the period. Exchange differences arising are recognized in OCI.
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On the disposal of a foreign operation (i.e. a disposal of the Bank’s entire interest in a foreign operation,
or a disposal involving loss of control over a subsidiary that includes a foreign operation, or a disposal
involving loss of significant influence over an associate that includes a foreign operation), all of the
exchange differences accumulated in equity in respect of that operation attributable to the stockholders
of the Bank are reclassified to profit or loss.
g. Cash and Cash Equivalents
Cash and cash equivalents in balance sheets include cash on hand, savings accounts and short-term
highly liquid investments that are readily convertible to known amounts of cash and with maturity dates
that do not present significant risks on changes in value resulting from changes in interest rates
(including due from banks, commercial paper and excess margin of futures guarantee deposits with
original maturities of three months or less).
For statements of cash flows, cash and cash equivalents refer the cash and cash equivalents in balance
sheets, the due from the central bank and call loans to other banks and securities purchased under
agreements to resell which conform to the IAS 7 cash and cash equivalents definition endorsed by the
FSC.
h. Securities Purchased/Sold Under Resell/Repurchase Agreements
Securities purchased under agreement to resell (reverse repurchase) and securities sold under
agreements to repurchase are generally treated as collateralized financing transactions. Interests
earned on reverse repurchase agreements and interests incurred on repurchase agreements are
recognized as interest income or interest expense over the life of each agreement.
i.
Financial Instruments
Financial assets and financial liabilities are recognized when a group entity becomes a party to the
contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are
directly attributable to the acquisition or issue of financial assets and financial liabilities (other than
financial assets and financial liabilities at fair value through profit or loss) are added to or deducted
from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition.
Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair
value through profit or loss are recognized immediately in profit or loss.
Financial assets
All regular way purchases or sales of financial assets are recognized and derecognized on a trade date
basis.
1) Measurement category
Financial assets are classified into the following categories:
a) Financial assets at FVTPL
Financial assets are classified as at FVTPL when the financial asset is either held for trading or
it is designated as at FVTPL.
A financial asset may be designated as at FVTPL upon initial recognition if:
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i.
Such designation eliminates or significantly reduces a measurement or recognition
inconsistency that would otherwise arise; or
ii. The financial asset forms part of a group of financial assets or financial liabilities or both,
which is managed and its performance is evaluated on a fair value basis, in accordance with
the Bank’s documented risk management or investment strategy, and information about the
grouping is provided internally on that basis; or
iii. The contract contains one or more embedded derivatives so that the entire hybrid
(combined) contract can be designated as at FVTPL.
Financial assets at FVTPL are stated at fair value, with any gains or losses arising on
remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss
incorporates any dividend or interest earned on the financial asset.
Investments in equity instruments under financial assets at FVTPL that do not have a quoted
market price in an active market and whose fair value cannot be reliably measured and
derivatives that are linked to and must be settled by delivery of such unquoted equity
instruments are subsequently measured at cost less any identified impairment loss at the end of
each reporting period and are presented in a separate line item as financial assets carried at cost.
If, in a subsequent period, the fair value of the financial assets can be reliably measured, the
financial assets are remeasured at fair value. The difference between the carrying amount and
the fair value is recognized in profit or loss.
b) Available-for-sale (AFS) financial assets
AFS financial assets are non-derivatives that are either designated as AFS or are not classified
as loans and receivables, held-to-maturity investments or financial assets at FVTPL.
AFS financial assets are measured at fair value. Changes in the carrying amount of AFS
financial assets relating to changes in foreign currency exchange rates, interest income
calculated using the effective interest method and cash dividends on AFS equity investments are
recognized in profit or loss. Other changes in the carrying amount of AFS financial assets are
recognized in OCI and will be reclassified to profit or loss when the investment is disposed of or
is determined to be impaired.
Cash dividends on AFS equity instruments are recognized in profit or loss when the right of the
Bank and subsidiaries to receive the dividends is established.
AFS equity investments that do not have a quoted market price in an active market and whose
ffair value cannot be reliably measured and derivatives that are linked to and must be settled by
delivery of such unquoted equity investments are measured at cost less any identified
impairment loss at the end of each reporting period and are presented in a separate line item as
financial assets carried at cost. If, in a subsequent period, the fair value of the financial assets
can be reliably measured, the financial assets are remeasured at fair value. The difference
between carrying amount and fair value is recognized in profit or loss or OCI on financial
assets. Any impairment losses are recognized in profit and loss.
c) Discounts and loans and receivables
Discounts and loans and receivables (including cash and cash equivalent, due from the Central
Bank and call loans to other banks, receivables, debt investments with no active market, and
other receivables) are measured at amortized cost using the effective interest method, less any
impairment, except for short-term receivables when the effect of discounting is immaterial.
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d) Non-accrual loans
The balance of overdue loans and other credits extended by the Bank including the accrued
interest are classified as non-accrual loans when they are overdue by six months, pursuant to
guidelines “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets
and Deal with Non-performing/Non-accrual Loans” (the “Regulations”) issued by the FSC.
Non- accrual loans reclassified from loans are classified as discounts and loans; otherwise, they
are classified as other financial assets.
e) Other financial assets
i.
Financial assets measured at cost
Investments in equity instruments with no quoted prices in an active market are initially
measured at fair value. Transaction costs are added to or deducted from the fair value, as
appropriate, on initial recognition.
At the end of the reporting period, the fair value may be reliably measured if:
i) the range of reasonable fair value estimates was not significant; or
ii) the probability of reasonable fair value estimates can be reasonably estimated;
Otherwise, investments in equity instruments with no quoted prices in an active market
should be measured at cost other than fair value.
ii. Bond investments with no active market
Bond investments with no active market are initially measured at fair value. Transaction
costs are added to or deducted from the fair value, as appropriate, on initial recognition in
profit or loss.
On derecognition of bond investments with no active market, gain or loss on disposal is
recognized.
iii. Customer margin accounts
The deposits received from customers are presented as “customer deposit account”
(included in other financial assets, net) and “futures traders’ equity” (included in other
financial liabilities) which are calculated daily by marking to market the open position of
each customer and determining the required margin levels. The debit balance of futures
traders’ equity, which results from losses on futures transactions in excess of the margin
deposited, is recorded as “accounts receivable - futures deposits.”
Customer margin accounts represent the customers’ deposits and premiums deposited in
banks for future transactions.
The deposits held by futures commission merchants (FCMs) for futures transactions are
transferred to a clearinghouse of exchange of which the FCM is member (a “clearing
FCM”).
2) Impairment of financial assets
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of
each reporting period. Financial assets are considered to be impaired when there is objective
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evidence that, as a result of one or more events that occurred after the initial recognition of the
financial asset, the estimated future cash flows of the investment have been affected.
Discounts and loans and receivables that are assessed as not impaired individually are further
assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of
discounts and loans and receivables could include the Bank and subsidiaries’ past experience of
collection, an increase in the number of delayed payments, as well as observable changes in national
or local economic conditions that correlate with defaults on discounts and loans and receivables.
For financial assets carried at amortized cost, the amount of the impairment loss recognized is the
difference between the asset’s carrying amount and the present value of estimated future cash flows,
discounted at the financial asset’s original effective interest rate .
For financial assets measured at amortized cost, if, in a subsequent period, the amount of the
impairment loss decreases and the decrease can be related objectively to an event occurring after the
impairment was recognized, the previously recognized impairment loss is reversed through profit or
loss to the extent that the carrying amount of the investment at the date the impairment is reversed
does not exceed what the amortized cost would have been had the impairment not been recognized.
For AFS equity investments, a significant or prolonged decline in the fair value of the security
below its cost is considered to be objective evidence of impairment.
When an AFS financial asset is considered to be impaired, cumulative gains or losses previously
recognized in OCI are reclassified to profit or loss in the period.
In respect of AFS equity securities, impairment loss previously recognized in profit or loss are not
reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is
recognized in OCI. In respect of AFS debt securities, the impairment loss is subsequently reversed
through profit or loss if an increase in the fair value of the investment can be objectively related to
an event occurring after the recognition of the impairment loss.
For financial assets that are carried at cost, the amount of the impairment loss is measured as the
difference between the asset’s carrying amount and the present value of the estimated future cash
flows discounted at the current market rate of return for a similar financial asset. Such impairment
loss will not be reversed in subsequent periods.
Impairment loss on financial asset is recognized by reducing its carrying amount through the use of
an allowance account. When financial assets are considered uncollectible, they are written off
against the allowance account. Recoveries of amounts previously written off are credited to the
allowance account. Changes in the carrying amount of the allowance account are recognized in
profit and loss.
Under the Regulations issued by the FSC, the Bank and subsidiaries should classify credit assets as
normal credit assets or unsound credit assets, with the unsound assets further categorized as special
mention, substandard, collectability highly doubtful, and uncollectible, on the basis of the debtor’s
financial position and the length of time the principal repayments or interest payments have become
overdue.
The Bank and subsidiaries made 100%, 50%, 10% and 2% provisions for credits deemed
uncollectible, collectability highly doubtful, substandard and special mention, respectively, as
minimum provisions for possible losses on unsound credit assets. In addition, the minimum
provisions for possible losses and losses on guarantees (included in “other liabilities”) should be the
sum of 0.5% of the outstanding balance of sound credit assets (excluding assets that represent
claims against an ROC government agency) and the foregoing provisions for unsound credit assets.
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Since January 1, 2014, the minimum loan loss provision and guarantee reserve for possible losses
shall be 1% of the outstanding balance of Category One credit asset (excluding assets that represent
claims against an ROC government agency). To strengthen the ability of banks to bear the loss of
specific credit assets, the competent authority may, if necessary, require banks to raise loan loss
provision and guarantee reserve of specific credit assets.
Write-offs of loans, after taking into account their collectability and value of collaterals in
accordance with the Regulations, and upon approval by the Bank and subsidiaries’ boards of
directors, are offset against the recorded allowance accounts.
3) Derecognition of financial assets
The Bank and subsidiaries derecognize a financial asset only when the contractual rights to the cash
flows from the asset expire, or when the financial asset and substantially all the risks and rewards of
ownership of the asset are transferred to another party.
On derecognition of a financial asset in its entirety, the difference between the asset’s carrying
amount and the sum of the consideration received and receivable and the cumulative gain or loss
that had been recognized in OCI is recognized in profit or loss.
Financial liabilities
1) Subsequent measurement
Except for the following situation, all the financial liabilities are measured at amortized cost using
the effective interest method:
a) Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is either held for
trading or it is designated as at FVTPL.
A financial liability may be designated as at FVTPL upon initial recognition when doing so
results in more relevant information and if:
i.
Such designation eliminates or significantly reduces a measurement or recognition
inconsistency that would otherwise arise;
ii. The financial liability forms part of a group of financial assets or financial liabilities or both,
which is managed and its performance is evaluated on a fair value basis, in accordance with
the Bank’s documented risk management or investment strategy, and information about the
grouping is provided internally on that basis.
iii. If a contract contains one or more embedded derivatives, the entire combined contract (asset
or liability) can be designated as at FVTPL.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on
remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss
incorporates any interest or dividend paid on the financial liability. Fair value is determined in
the manner described in Note 41.
b) Financial guarantee contracts
Financial guarantee contracts issued by the Bank and subsidiaries are initially measured at their
fair values and, if not designated as at FVTPL, are subsequently measured at the higher of the
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best estimate of the obligation under the contract or the amount initially recognized less
cumulative amortization recognized.
The amounts of increase (decrease) in reserve for losses on guarantees shall be recognized in the
account of “provision for credit losses.”
2) Derecognition of financial liabilities
The difference between the carrying amount of the financial liability derecognized and the
consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in
profit or loss.
Equity instruments
Debt and equity instruments issued by a group entity are classified as either financial liabilities or as
equity in accordance with the substance of the contractual arrangements and the definitions of a
financial liability and an equity instrument.
Equity instruments issued by a group entity are recognized at the proceeds received, net of direct issue
costs.
Repurchase of the Bank’s own equity instruments is recognized in and deducted directly from equity.
No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Bank’s
own equity instruments.
Derivative financial instruments
The Bank and subsidiaries enter into a variety of derivative financial instruments to manage exposure to
interest rate and foreign exchange rate risks, including foreign exchange forward contracts, interest rate
swaps and cross currency swaps.
Derivatives are initially recognized at fair value at the date the derivative contracts are entered into and
are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain
or loss is recognized in profit or loss immediately unless the derivative is designated and effective as a
hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature
of the hedge relationship. When the fair value of derivative financial instruments is positive, the
derivative is recognized as a financial asset; when the fair value of derivative financial instruments is
negative, the derivative is recognized as a financial liability.
Derivatives embedded in non-derivative host contracts are treated as separate derivatives when they
meet the definition of a derivative, their risks and characteristics are not closely related to those of the
host contracts and the contracts are not measured at fair value through profit or loss.
j.
Property and Equipment
Property and equipment are stated at cost, less subsequent accumulated depreciation and subsequent
accumulated impairment loss.
Depreciation is recognized using the straight-line method. Each significant part is depreciated
separately. The estimated useful lives, residual values and depreciation method are reviewed at the
end of each reporting period, with the effect of any changes in estimate accounted for on a prospective
basis.
Any gain or loss arising on the disposal or retirement of an item of property and equipment is
determined as the difference between the sales proceeds and the carrying amount of the asset and is
recognized in profit or loss (included in “ revenues and gains other than interest, net”).
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k. Intangible Assets
1) Intangible assets acquired separately
Intangible assets with finite useful lives that are acquired separately are initially measured at cost
and subsequently measured at cost less accumulated amortization and accumulated impairment loss.
Amortization is recognized on a straight-line basis. The estimated useful life, residual value, and
amortization method are reviewed at the end of each reporting period, with the effect of any
changes in estimate accounted for on a prospective basis. The residual value of an intangible asset
with a finite useful life shall be assumed to be zero unless the Bank and subsidiaries expect to
dispose of the intangible asset before the end of its economic life. Intangible assets with indefinite
useful lives that are acquired separately are measured at cost less accumulated impairment loss.
2) Intangible assets acquired in a business combination
Intangible assets acquired in a business combination and recognized separately from goodwill are
initially recognized at their fair value at the acquisition date (which is regarded as their cost).
Subsequent to initial recognition, intangible assets acquired in a business combination are reported
at cost less accumulated amortization and accumulated impairment loss, on the same basis as
intangible assets that are acquired separately.
3) Derecognition of intangible assets
Gains or losses arising from derecognition of an intangible asset, measured as the difference
between the net disposal proceeds and the carrying amount of the asset, are recognized in profit or
loss when the asset is derecognized.
l.
Impairment of Tangible and Intangible Assets Other than Goodwill
At the end of each reporting period, the Bank and subsidiaries review the carrying amounts of their
tangible and intangible assets, excluding goodwill, to determine whether there is any indication that
those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of
the asset is estimated in order to determine the extent of the impairment loss.
When it is not possible to estimate the recoverable amount of an individual asset, the Bank estimate the
recoverable amount of the CGU to which the asset belongs. When a reasonable and consistent basis of
allocation can be identified, corporate assets are also allocated to the individual CGU; otherwise they
are allocated to the smallest group of CGU for which a reasonable and consistent allocation basis can be
identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for
impairment at least annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable
amount of an asset or CGU is estimated to be less than its carrying amount, the carrying amount of the
asset or CGU t is reduced to its recoverable amount.
When an impairment loss is subsequently reversed, the carrying amount of the asset or CGU is
increased to the revised estimate of its recoverable amount, but only to the extent of the carrying
amount that would have been determined had no impairment loss been recognized for the asset or CGU
in prior years. A reversal of an impairment loss is recognized in profit or loss.
m. Hedge Accounting
The Bank designates certain hedging instruments, as cash flow hedges.
201
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash
flow hedges is recognized in OCI. The gain or loss relating to the ineffective portion is recognized
immediately in profit or loss.
The associated gains or losses that were recognized in OCI are reclassified from equity to profit or loss
as a reclassification adjustment in the line item relating to the hedged item in the same period when the
hedged item affects profit or loss. If a hedge of a forecast transaction subsequently results in the
recognition of a non-financial asset or a non-financial liability, the associated gains and losses that were
recognized in OCI are removed from equity and are included in the initial cost of the non-financial asset
or non-financial liability.
Hedge accounting is discontinued prospectively when the Bank and subsidiaries revoke the designated
hedging relationship, or when the hedging instrument expires or is sold, terminated, or exercised, or
when it no longer meets the criteria for hedge accounting. The cumulative gain or loss on the hedging
instrument that has been previously recognized in OCI from the period when the hedge was effective
remains separately in equity until the forecast transaction occurs. When a forecast transaction is no
longer expected to occur, the gain or loss accumulated in equity is recognized immediately in profit or
loss.
n. Financial Debentures (the “Debentures”)
1) Convertible financial debentures
The conversion options component of the convertible financial debentures issued by the Bank and
subsidiaries that will be settled other than by the exchange of a fixed amount of cash or other
financial asset for a fixed number of the Bank’s own equity instruments is classified as derivative
financial liabilities.
On initial recognition, the derivative financial liabilities component of the convertible financial
debentures is recognized at fair value, and the initial carrying amount of the component of
non-derivative financial liabilities is determined by deducting the amount of derivative financial
liabilities from the fair value of the hybrid instrument as a whole. In subsequent periods, the
non-derivative financial liabilities component of the convertible financial debentures is measured at
amortized cost using the effective interest method. The derivative financial liabilities component
is measured at fair value and the changes in fair value are recognized in profit or loss.
Transaction costs that relate to the issue of the convertible notes are allocated to the derivative
financial liabilities component and the non-derivative financial liabilities component in proportion
to their relative fair values. Transaction costs relating to the derivative financial liabilities
component are recognized immediately in profit or loss. Transaction costs relating to the
non-derivative financial liabilities component are included in the carrying amount of the liability
component.
2) Financial debentures
Financial debentures issued by the Bank are recorded on an amortized cost basis using the effective
interest method.
Debt instrument hedged by interest rate swap to achieve the Bank’s risk management strategy is
designated as at fair value through profit or loss on initial recognition and the designation cannot be
revoked.
202
o. Convertible Preferred Stocks
For convertible preferred stocks issued which are non-cumulative perpetual, the Bank first determines
the carrying amount of the liability component by measuring the fair value of a similar liability that
does not have an associated equity component, then determines the carrying amount of the equity
component, representing the equity conversion option, by deducting the fair value of the liability
component from the fair value of the convertible preferred stocks as a whole. The Bank should accrue
interest payable at annual dividend rate (Note 27) of the subscription price, when making
appropriations. Upon conversion, the Bank uses the aggregate carrying amount of the liability and
equity components of the preferred stocks at the time of conversion as a basis to record the common
shares issued.
Transaction costs of convertible preferred stocks are allocated in proportion to the liability and equity
components of the preferred stocks. Transaction costs allocated to the equity component are
accounted for as a deduction from equity, net of any income tax benefit.
p. Provisions
Provisions are measured at the best estimate of the consideration required to settle the present obligation
at the end of the reporting period, taking into account the risks and uncertainties surrounding the
obligation. When a provision is measured using the cash flows estimated to settle the present
obligation, its carrying amount is the present value of those cash flows (where the effect of the time
value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered
from a third party, a receivable is recognized as an asset if it is virtually certain that reimbursement will
be received and the amount of the receivable can be measured reliably.
q. Employee Share Options
Equity-settled share-based payments to employees are measured at the fair value of the equity
instruments at the grant date.
The fair value determined at the grant date of the employee share options is expensed on a straight-line
basis over the vesting period, based on the Bank and subsidiaries’ estimate of employee share options
that will eventually vest, with a corresponding increase in capital surplus-employee share options. The
fair value determined at the grant date of the employee share options is recognized as an expense in full
at the grant date when the share options granted vest immediately.
At the end of each reporting period, the Bank and subsidiaries revise the estimate of the number of
employee share options expected to vest. The impact of the revision of the original estimates is
recognized in profit or loss such that the cumulative expense reflects the revised estimate, with a
corresponding adjustment
d
to the capital surplus-employee
surplus-employee share options.
r. Interest Revenue and Expense
Interest income and expenditures from financial instruments except for financial assets and liabilities at
FVTPL accrued at the effective
f
interest rate applicable are accounted as “interest revenue” and
“interest, expense”, respectively, in consolidated statements of comprehensive income.
Once a financial asset or a group of similar financial assets have been written down as a result of an
impairment loss, interest revenue is thereafter recognized using the rate of interest used to discount the
future cash flows for the purpose of measuring the impairment loss.
203
s. Commissions and Fee Revenues and Charges
Commissions and fee revenues and charges are recognized after lending or other services have been
rendered. In some conditions, for example, if the Bank and subsidiaries are the lead lenders in
syndicated loans, commissions and fee revenues are recognized when material portion of the services
been provided. Some revenues and charges are recognized on a time basis by straight-line method over
the period of the lending agreement or calculated as a part of effective interest rate.
t.
Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks
and rewards of ownership to the lessee. Except for TCIFI, all other leases are classified as operating
leases.
1) The Bank and subsidiaries as lessor
Rental income from operating leases is recognized on a straight-line basis over the term of the
relevant lease.
2) The Bank and its subsidiaries as lessee
Operating lease payments are recognized as an expense on a straight-line basis over the lease term.
u. Employee Benefits
1) Short-term employee benefit
The Bank and subsidiaries recognize the undiscounted amount of short-term employee benefits
expected to be paid in exchange for the services employees have rendered during an accounting
period.
2) Retirement benefit costs
The Bank and subsidiaries’ retirement benefit plans include defined contribution retirement benefit
plans and defined benefit retirement benefit plans. The employees of TCF HK and the Hong Kong
branch are members of a state-managed defined contribution plans operated by the government of
Hong Kong.
Payments to defined contribution retirement benefit plans are recognized as an expense when
employees have rendered service entitling them to the contributions.
For defined benefit retirement benefit plans, the cost of providing benefits is determined using the
Projected Unit Credit Method. All actuarial gains and losses on the defined benefit obligation are
recognized immediately in OCI. Past service cost is recognized immediately to the extent that the
benefits are already vested, and otherwise is amortized on a straight-line basis over the average
period until the benefits become vested.
The retirement benefit obligation recognized in the consolidated balance sheets represents the
present value of the defined benefit obligation as adjusted for unrecognized past service cost, and as
reduced by the fair value of plan assets. Any asset resulting from this calculation is limited to the
unrecognized past service cost, plus the present value of available refunds and reductions in future
contributions to the plan.
Curtailment or settlement gains or losses on the defined benefit plan are recognized when the
curtailment or settlement occurs.
204
3) Preferential deposit program provided to employees
The Bank provides preferential deposit program to present employees (excluding subsidiaries’
employees). The program has preferential interest rate of deposits higher than current market rates.
Under the Regulations Governing the Preparation of Financial Reports by Public Banks, the Bank
shall recognize the differential amount between interest expenditure calculated with preferential
interest rate and interest expenditure calculated with existing market rate as employee benefit
expense.
4) Other long-term employee benefits
Other long-term employee benefits are accounted for in the same way as post-employment benefits
except that all past service cost and actuarial gains and losses are recognized immediately.
v. Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
1) Current tax
According to the Income Tax Law, an additional tax at 10% of undistributed earnings is provided
for as income tax in the year the shareholders approve to retain the earnings.
Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax
provision.
2) Deferred tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets and
liabilities in the consolidated financial statements and the corresponding tax bases used in the
computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable
temporary differences. Deferred tax assets are generally recognized for all deductible temporary
differences, unused loss carry forward and personnel training expenditures to the extent that it is
probable that taxable profits will be available against which those deductible temporary differences
can be utilized. Such deferred tax assets and liabilities are not recognized if the temporary
difference had arisen from goodwill or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor
the accounting profit.
Deferred tax liabilities are recognized for taxable temporary differences associated with investments
in subsidiaries, except where the Bank and subsidiaries are able to control the reversal of the
temporary difference and it is probable that the temporary difference will not reverse in the
foreseeable future. Deferred tax assets arising from deductible temporary differences associated
with such investments and interests are only recognized to the extent that it is probable that there
will be sufficient taxable profits against which to utilize the benefits of the temporary differences
and the temporary differences are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and
reduced to the extent that it is no longer probable that sufficient taxable profits will be available to
allow all or part of the asset to be recovered. A previously unrecognized deferred tax asset is also
reviewed at the end of each reporting period and recognized to the extent that it has become
probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the
period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that
have been enacted or substantively enacted by the end of the reporting period. The measurement
205
of deferred tax liabilities and assets reflects the tax consequences that would follow from the
manner in which the Bank and subsidiaries expect, at the end of the reporting period, to recover or
settle the carrying amount of its assets and liabilities.
3) Current and deferred tax for the year
Current tax and deferred tax are recognized in profit or loss, except when they relate to items that
are recognized in OCI or directly in equity, in which case, the current tax and deferred tax are also
recognized in OCI or directly in equity respectively. Where current tax or deferred tax arises from
the initial accounting for a business combination, the tax effect is included in the accounting for the
business combination.
5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION
UNCERTAINTY
In the application of the Bank and subsidiaries’ accounting policies, management is required to make
judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not
readily apparent from other sources. The estimates and associated assumptions are based on historical
experience and other factors that are considered relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognized in the period in which the estimate is revised if the revision affects only that period
or in the period of the revision and future periods if the revision affects both current and future periods.
a. Estimated impairment of loans and receivables
The Bank and subsidiaries assess monthly loans collectively. When determining whether an impairment
loss should be recognized, the Bank and subsidiaries mainly seek for observable evidence that indicates
impairment. Objective evidence of impairment of a portfolio of loans and receivables could include the
Bank and subsidiaries past difficulty in collecting payments and an increase in the number of delayed
payments, as well as observable changes in national or local economic conditions that correlate with
defaults on loans and receivables.
Management uses past loss experience on assets that have similar credit risk characteristics to estimate
the expected future cash flows. The Bank and subsidiaries review the methods and assumptions of cash
flow estimation regularly to eliminate the difference between expected and actual loss. Summary of
evaluation of impairment loss from loans and receivables is shown on Table 9.
b. Fair values of financial instruments
Fair values of financial instruments in an inactive market or with no quoted market prices are
determined by valuation techniques or quoted from Bloomberg or counterparty. Under these
circumstances, fair values are derived from observable market data of other similar financial assets.
When there are no observable inputs in the market, the fair values of financial instruments are estimated
by making appropriate assumptions. The Bank and subsidiaries apply appropriate valuation models to
determine the fair values of financial instruments by valuation techniques. All models are fine-tuned to
ensure the valuation results fairly reflect actual market information and prices. The models use as much
observable inputs as possible.
However, in the process of assessing credit risks (the risks referring to counterparties), management is
required to make estimates of volatility of fair values of financial instruments and correlation between
fair values and credit risks. Detail descriptions of assumptions used in valuation models are disclosed
in Note 41.
206
c. Income taxes
As of December 31, 2014 and 2013, the carrying amount of deferred tax assets in relation to unused tax
losses was $1,313,781 thousand and $1,662,476 thousand, respectively.
As of December 31, 2014 and 2013, no deferred tax asset has been recognized on the tax loss of
$174,369 thousand and $239,244 thousand, respectively, due to the unpredictability of future profit
streams. The reliability of the deferred tax asset mainly depends on whether sufficient future profits or
taxable temporary differences will be available in the future. In cases where the actual future profits
generated are less than expected, a material reversal of deferred tax assets may arise, which would be
recognized in profit or loss for the period in which such reversal takes place.
d. Useful lives and residual values of property and equipment
As described in Note 4 j above, the Bank and subsidiaries review the estimated useful lives and residual
values of property and equipment at each balance sheet date. The estimation of the useful life and
residual value of the asset is a matter of judgments based on the experience of entities with similar
assets and developments in technology in the future.
e. Recognition and measurement of defined benefit plans
Employee benefit expenses and provisions for defined benefit retirement plans were calculated using
the Projected Unit Credit Method. Actuarial assumptions comprise the discount rate, rate of employee
turnover, and long-term average future salary increase. Changes in economic circumstances and
market conditions will affect these assumptions and may have a material impact on the amount of the
expense and the liability.
f. Share-based payment arrangements
Employee share options issued by the Bank and subsidiaries granted to employees were measured at the
fair value of the equity instruments at the grant date according to IFRS 2 endorsed by the FSC.
Because the issuance terms of employee share options are different from those issued in the market,
they lack quoted market price. In this situation, the Bank and subsidiaries determine the fair value of
employee share options by using a valuation model that is the same as the model used to determine the
fair value in the market.
6. CASH AND CASH EQUIVALENTS
December 31
2014
Cash on hand
Checks for clearing
Due from banks
Cash equivalents
Commercial papers
Balance of excess futures guarantee deposits
$
$
1,666,832
1,088,562
1,240,994
2013
$
1,680,799
954,998
8,365,412
311,810
196,180
268,682
229,160
4,504,378
$ 11,499,051
The market rate intervals of cash due from banks and commercial papers at the end of the reporting period
were as follows:
207
December 31
Due from banks (%)
Commercial papers (%)
2014
2013
0-1.37
0.60
0-0.60
0.67
As of December 31, 2014 and 2013, the carrying amounts of time deposits with original maturities of over
three months were $10,897,916 thousand and $839,688 thousand, respectively, which were classified as
“Debt investments with no active market (Refer to Note 14).
7. DUE FROM THE CENTRAL BANK AND CALL LOANS TO OTHER BANKS
December 31
2014
Deposit reserve accounts
Account A
Account B
Foreign currency deposits
$
Call loans to banks
Interbank clearing accounts
2013
2,601,498
7,988,864
56,979
10,647,341
1,361,165
1,068,135
$ 13,076,641
$
9,993,983
7,987,407
17,981,390
837,900
873,506
$ 19,692,796
According to the rules stipulated by the Central Bank, the deposit reserve accounts are determined monthly
at prescribed rates based on the average balances of various deposits. The balance of reserve account B
can be withdrawn only when the balances are adjusted monthly.
8. FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS
December 31
2014
2013
Financial assets held for trading
Derivative financial assets (not under hedge accounting)
Interest rate swap (IRS) contracts
Buying option contracts
Assets swap contracts
Foreign currency swap contracts
Forward contracts
Credit default swap (CDS) contracts
Cross-currency swap (CCS) contracts
Credit value adjustments (CVA)
Non-derivative financial assets
Short-term bills
Bonds
Mutual funds
Domestic listed stocks
208
$
971,344
4,234,742
109,296
535,014
465,106
6,573
7,472
(34,911)
6,294,636
18,925,524
7,790,856
586,263
653,628
$
753,740
590,231
119,990
54,377
36,796
10,057
5,641
1,570,832
16,945,228
8,123,536
760,310
574,018
(Continued)
December 31
2014
Foreign listed stocks
Futures transaction deposits
$
2013
18,954
27,975,225
$
21,669
6,200
26,409,292
Financial assets designated as at FVTPL
Overseas convertible bonds
Domestic convertible bonds
Corporate bonds
Total financial assets at FVTPL
1,255,380
160,000
157,029
1,572,409
145,958
145,958
$ 35,842,270
$ 28,126,082
$
$
Financial liabilities held for trading
Derivative financial liabilities
IRS contracts
Selling option contracts
Asset swap contracts
Adjustment rights for conversion price embedded in the 2007
Debentures (Note 23)
Adjustment and reset rights for conversion price and redemption
rights embedded in the ECB (Note 23)
Warrants liabilities
Repurchased warrants issued
Forward contracts
CCS contracts
CDS contracts
Debit value adjustments (DVA)
886,916
4,236,567
186,267
-
647,252
586,590
399,203
304,500
1,220,933
249,147
1,361
4,097
651,056
(9,748)
7,426,596
272,070
(269,951)
47,041
25,251
8,524
2,020,480
4,834,955
4,847,634
Financial liabilities designated as at FVTPL
Subordinated financial debentures
Total financial liabilities at FVTPL
$ 12,261,551
$
6,868,114
(Concluded)
Gains or losses from financial
f
instruments at FVTPL were as follows:
For the Year Ended December 31
2014
2013
Realized gains, net
Gains on valuation
$
990,101
724,260
Net gains
$ 1,714,361
$
980,811
1,514,252
$ 2,495,063
209
a. Warrants liabilities, net - only December 31, 2013
December 31,
2013
Less: Gains on changes in market value of stock warrants liabilities
$ 290,252
(18,182)
272,070
271,365
(1,414)
269,951
Repurchased warrants
Less: Losses on changes in market value of stock warrants repurchased
Warrants liabilities, net
$
2,119
Above gains or losses on changes in market value are calculated at the closing price of stock warrants
on December 31, 2013.
Above stock warrants are classified as American type. The durations vary according to the issuance
terms after listing and the settlement is made by securities. However, the issuer could choose to settle
by cash.
Gains or losses on stock warrants issued (included in “gain or loss from financial liabilities and assets at
FVTPL”) were as follows:
2014
2013
Gains on changes in market value of stock warrants issued
liabilities
Gains on (Losses from) settlement of stock warrants issued
liabilities before the due date
Losses on changes in market value of stock warrants repurchased
Issuance cost of warrants
Net losses
$
410,382
$ 1,728,460
21
(410,235)
(430)
$
(262)
(462)
(1,732,977)
(5,278)
$
(10,257)
b. Financial debentures designated as at FVTPL
A financial asset is designated as at FVTPL upon initial recognition if the contract contains one or more
embedded derivatives so that the entire hybrid contract can be designated as at FVTPL.
Financial debentures designated as at FVTPL were as follows:
1) In February 2010, the Bank issued financial debentures with total amount of $0.5 billion which will
mature in February 2017. The debentures bear fixed interest rate of 3.50% payable annually and
principal is payable on maturity date.
2) In March 2010, the Bank issued financial debentures, which will mature in March 2017, with total
amount of $2.12 billion. The debentures bear fixed interest rate of 3.75% payable annually and
principal is payable on maturity date.
amount of $2 billion. The debentures bear fixed interest rate of 3% payable annually and principal
is payable on maturity date.
210
The differences between carrying amount and amount payable to creditor at maturity were:
December 31
Differences between carrying amount and contract amount at
maturity:
Financial debenture at fair value
Amount payable at maturity
2014
2013
$ 4,834,955
4,620,000
$ 4,847,634
4,620,000
$
$
214,955
227,634
The changes in fair value of financial liabilities designated as at FVTPL attributable to changes in credit
risk and market rate:
Change in Fair
Values
Resulting from
Credit Risk
Variations
During the Year
Year ended December 31, 2014
Year ended December 31, 2013
$
$
Cumulative
As of December 31, 2014
As of December 31, 2013
$ (3,482)
$ (3,714)
232
(338)
The changes in fair value attributable to changes in credit risk were calculated as the difference between
the fair value of subordinated financial debentures of $12,679 thousand and $56,420 thousand and the
fair value adjusted for market risk factors which amounted to $12,911 thousand and $56,082 thousand
for the years ended December 31, 2014 and 2013, respectively. The change in fair value due to market
risk factors was calculated using benchmark interest yield curves at the end of the reporting period with
credit risk margin held constant. The fair value of subordinated financial debentures was estimated by
discounting future cash flows using benchmark interest yield curves at the end of the reporting period
and by obtaining lender quotes for borrowing with similar maturity to estimate credit risk margin.
The contract amounts (or notional amounts) of unexpired derivative transactions of the Bank and TCSC
were as follows:
December 31
IRS contracts
Selling option contracts
Forward contracts
CCS contracts
Buying CDS contracts
Selling CDS contracts
Futures contracts
Equity linked swap contracts
2014
2013
$ 131,229,912
190,265,460
30,770,680
29,957,600
54,029,503
4,935,436
1,141,305
823,030
823,030
156,564
220,322
$ 165,981,242
142,678,058
19,490,750
19,226,009
17,967,354
6,333,595
2,852,950
778,050
1,226,925
132,829
115,242
211
The Bank engages in derivative transactions mainly to accommodate customers’ needs, manage its
exposure position resulting from fluctuations in its exchange rate and interest rate and credit risks due to
maturing bond investments. The Bank’s financial hedging strategy is to hedge most of changes in fair
value or cash flow risk.
As of December 31, 2014 and 2013, guarantee deposits of $3,777,075 thousand, $173,266 thousand,
respectively (included in “refundable deposits”) were provided by the Bank for dealing in derivative
transactions with counterparties; guarantee deposits received of $25,077 thousand and $0 thousand,
respectively (included in “other liabilities-guarantee deposits received”) were provided by
counterparties for dealing in derivative transactions.
As of December 31, 2014 and 2013, the financial assets at FVTPL, which totally amounted to
$9,092,011 thousand and $12,995,310 thousand, had been sold under repurchase agreements.
The subsidiaries provided the mutual funds mortgaged to banks and bills corporations for security of
short-term financing and as collaterals (please refer to note 44).
9. SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL
Securities purchased under agreements to resell pertain to the purchased bonds of central government of the
Republic of China.
December 31
Agreed upon price to resell
Interest rate (%)
2014
2013
$ 1,973,418
0.56-0.57
$ 2,523,960
0.57-0.61
10. AVAILABLE-FOR-SALE FINANCIAL ASSETS, NET
December 31
2014
2013
$ 52,079,776
13,705,578
7,421,412
996,564
504,079
74,707,409
$ 66,401,494
14,559,764
3,209,302
1,186,546
1,610,678
86,967,784
3,210,314
3,179,308
1,869,166
163,266
8,422,054
3,603,212
2,881,194
842,739
105,310
7,432,455
$ 83,129,463
$ 94,400,239
Domestic investments
Negotiable certificates of deposits (NCD)
Corporate bonds
Government bonds
Quoted stocks
Financial debentures
Foreign investments
Corporate bonds
Government bonds
Treasury bills
Beneficial certificates
212
In order to connect and participate in the on-line inter-bank clearing system, the Bank provided NCD of
$8.1 billion and $1.5 billion as of December 31, 2014 and 2013, respectively, as collaterals for the daily
overdraft credit lines with the Central Bank of the Republic of China.
Part of the bonds held by the Bank, including some collateralized bonds which had matured is placed by the
Bank for the following purposes:
December 31
2014
Deposits for clearing reserve in the GreTai Securities Market
Deposits for reserve of trust fund
Guarantee deposits with the courts
Deposits for guarantees in the Central Bank
Deposits for securities dealer
Deposits for transaction reserve in Financial Information Service
Co., Ltd.
Guarantee deposits for derivative financial instrument transactions
$
70,000
70,000
59,200
50,000
10,000
2013
$
70,000
60,000
62,700
50,000
10,000
4,000
-
3,800
29,925
$ 263,200
$ 286,425
The aforementioned guarantee deposits for clearing reserve in GreTai Securities Market are for the purpose
of using GreTai Government Bonds System. The deposits for reserve of trust fund are paid in accordance
with relevant regulations for the custodian business operated by the Bank’s Trust Division. The guarantee
deposits with the courts are used as collateral deposits with the courts if the Bank seizes debtor’s properties.
The deposits for guarantees in the Central Bank of the Republic of China are paid in accordance with
relevant regulations for the business of sales and purchases of bonds and bills. The deposits for securities
dealer are placed with the Bank of Taiwan in accordance with relevant regulations. The deposits for
transaction reserve in Financial Information Service Co., Ltd. are placed for VISA card transactions. The
deposits for derivative financial instrument transactions are provided to the counterparties when the Bank
engages in the transactions of derivative financial instruments.
For the years ended December 31, 2014 and 2013, realized gains (losses) from AFS financial assets were as
follows:
2014
2013
Domestic quoted stocks
Government bonds
Corporate bonds
Beneficiary certificates
$
35,477
11,932
47,487
36,518
519
$
33,989
(43,823)
22,384
33,713
(2,931)
$ 131,933
$
43,332
As of December 31, 2014 and 2013, the financial assets at AFS financial assets, which totally amounted to
$7,851,701 thousand and $4,793,609 thousand, had been sold under repurchase agreements.
213
11. RECEIVABLES, NET
December 31
2014
Credit card payments
Factored receivables
Margin accounts receivable
Settlement receivables
Interest receivables
Acceptance notes receivable
Installments receivables
Accrued revenues
Receivable from non-performing loans (NPL)
Others
$
6,703,379
9,513,795
3,897,402
1,494,678
932,363
175,823
165,740
62,200
327,455
23,272,835
222,831
Allowance for credit losses
$ 23,050,004
2013
$
6,397,590
9,018,591
3,223,779
1,559,215
616,948
428,431
169,513
64,860
584,345
521,874
22,585,146
298,164
$ 22,286,982
The movement of allowance for credit losses on receivables for the years ended December 31, 2014 and
2013, respectively, are summarized below:
Assessment for
Individual
Collective
impairment
Impairment
Total
For the Year Ended December 31, 2014
Balance at January 1
Provisions (reversal)
Written-off
Recovery of written-off credits
Effect of exchange rate change
$ 157,141
8,871
(192,944)
180,211
749
$ 141,023
(72,220)
-
$ 298,164
(63,349)
(192,944)
180,211
749
Balance at December 31
$ 154,028
$
$ 222,831
Provisions (reversal)
Written-off
$ 150,593
(13,408)
(164,859)
184,387
428
$ 130,268
10,755
-
$ 280,861
(2,653)
(164,859)
184,387
428
$ 157,141
$ 141,023
$ 298,164
68,803
For the Year ended December 31, 2013
The factored receivables represent indebtedness of customers purchased from the Bank and subsidiaries.
In such business, the Bank and subsidiaries provide credit information, collection and financing services to
itheir customers, and earns commissions and interest income.
transaction
Above receivables ffrom NPL are recognized from the tra
nsaction of selling NPL with the price of $584,345
thousand (carrying amount of $200,018 thousand) in December 2013. The excess of the selling price over
the carrying amount, is recognized as addition to allowance for credit losses on receivables.
The installment receivables arise from installment sales of TCIFI; interest income is earned from financial
services provided to its customers.
214
12. DISCOUNTS AND LOANS, NET
December 31
2014
Overdrafts
Unsecured
Secured
Import - export negotiations
Bills discounts
Loans
Unsecured short-term
Secured short-term
Unsecured medium-term
Secured medium-term
Unsecured long-term
Secured long-term
Accounts receivable - financing
NPL
$
Allowance for credit losses
28,698
188,790
341,011
2013
$
157
20,481
23,559
328,201
44,825,309
33,854,417
50,767,276
25,059,433
1,562,332
133,709,684
854,750
167,634
291,359,334
4,667,651
39,129,166
25,121,414
45,312,243
24,559,629
2,497,878
130,214,949
217,068
267,987
267,692,732
4,146,619
$ 286,691,683
$ 263,546,113
The allowance for credit losses on NPL, discounts and loans and receivables assessed for impairment as of
December 31, 2014 and 2013 is disclosed in Table 9.
The movements in allowance for credit losses of discounts and loans for the years ended December 31,
2014 and 2013, respectively, as analyzed by risk factors, are summarized below:
Risks Pertaining to
Particular
Overall Loan
Loans
Portfolio
Total
Provisions (Reversal)
Write-off
$ 1,571,145
(272,935)
(1,073,762)
978,655
25,741
$ 2,575,474
863,333
-
$ 4,146,619
590,398
(1,073,762)
978,655
25,741
$ 1,228,844
$ 3,438,807
$ 4,667,651
Provisions
Write-off
$ 1,800,212
87,193
(1,487,592)
1,163,728
7,604
$ 1,941,902
633,572
-
$ 3,742,114
720,765
(1,487,592)
1,163,728
7,604
$ 1,571,145
$ 2,575,474
$ 4,146,619
215
The details of provision for (reversal of) credit losses were as follows:
2014
2013
Provisions for credit loss on discounts and loans
Reversal of credit loss on receivables
Provision for (reversal of) loss on guarantees
$ 590,398
(63,349)
(45,098)
$ 720,765
(2,653)
3,065
$ 481,951
$ 721,177
As of December 31, 2014 and 2013, the balances of the Bank’s non-accrual loans and receivables were
$167,634 thousand and $267,987 thousand, respectively. The unrecognized interest income on
non-accrual loans and receivables amounted to $6,126 thousand and $18,243 thousand for the years ended
December 31, 2014 and 2013, respectively.
For the years ended December 31, 2014 and 2013, the Bank had not written off credits for which legal
proceedings had not been initiated.
13. RESRICTED ASSETS, NET
Subsidiaries pledged time deposits to banks and bills corporations for short-term financing and as collateral
(please refer to Note 44).
14. OTHER FINANCIAL ASSETS, NET
December 31
2014
a. Financial assets carried at cost
Emerging Shares
Franbo Lines Co., Ltd.
Auden Techno. Co., Ltd.
Jetbest Co., Ltd.
Dynacard Co., Ltd.
Others
Unquoted shares
Financial Information Service Co., Ltd.
Chain Wave medical Inc.
Taiwan Futures Exchange
Taiwan Farm Industry Co., Ltd. (TFIC)
Guang Yu International Investment Co., Ltd.
Excelsior Bio-System, Inc.
Great World Department Store (GWDS)
Rafael Micro Co., Ltd.
Taiwan Farm Tunnan Co., Ltd. (TFTC)
Sunny Asset Management Co.
Taipei Foreign Exchange Market Development Foundation
Hua Ching Ventures, Inc. (HC ventures)
Lian Bao Ventures, Inc. (LBV)
216
$
2013
30
45,500
20,000
17,502
15,996
10,000
9,000
7,823
7,000
6,000
2,444
1,902
800
140
144,137
$
9,993
7,322
6,549
4,807
29,475
45,500
17,502
18,440
20,457
1,902
800
140
731
163,618
(Continued)
December 31
2014
b. Debt investments with no active market
Time deposits with original maturity more than 3 months
2013
$ 10,897,916
c. Other miscellaneous financial assets
Customer margin account
$
839,688
292,193
362,589
$ 11,334,246
$
1,365,895
(Concluded)
Management believed that the above unquoted shares and emerging market shares held by the Bank and
subsidiaries do not have fair values that can be reliably measured due to the significant range of reasonable
fair value estimates; therefore, the shares were measured at cost less impairment at the end of reporting
period.
In the second quarter of 2014, TFTC was separated from the real-estate department of TFIC, and TFIC
made stock-split. The Bank had exchanged all the stocks of TFIC based on the percentage of stock-split.
The initial investment cost recognized and accumulated impairment had also been adjusted based on the
same percentage.
After evaluating the financial position, the Bank recognized impairment loss of $188 thousand on its
investment in LBV in 2013. Furthermore, the Bank disposed of all the stocks of LBV to receive the return
of investment of $1,415 thousand and recognized disposal gain of $684 thousand in the second quarter of
2014. In addition, TCIFI, the subsidiary, also received the return of investment $10,870 thousand from
GWDS capital reduction, and recognized impairment loss of $1,765 thousand in 2014.
The market interest rates of time deposits with original maturity of more than 3 months were as follows:
December 31
Market interest rates (%)
2014
2013
3.60-4.25
3.13-4.15
15. PROPERTY AND EQUIPMENT, NET
For the year ended December 31, 2014
Machinery and
computer
Transportation
equipment
equipment
Other
equipment
Construction
in progress
Prepayments
for equipment
Leasehold
improvements
Land
Buildings
Total
Balance at January 1, 2014
Additions
Reclassifications
Disposals
$ 2,356,953
(14,633 )
-
$ 1,242,767
168
(8,425 )
-
$
619,060
58,520
2,927
(52,975 )
$
4,277
(142 )
$
225,739
8,162
(9,223 )
$
17,384
42,914
(59,210 )
-
$
43,545
49,438
(58,800 )
-
$
60,714
704
259
(9,357 )
$ 4,570,439
159,906
(137,882 )
(71,697 )
Balance at December 31, 2014
$ 2,342,320
$ 1,234,510
$
627,532
$
4,135
$
224,678
$
1,088
$
34,183
$
52,320
$ 4,520,766
Disposals
Reclassifications
Depreciation expense
Effect of foreign currency exchange
differences
$
58,578
-
$
438,865
(1,730 )
22,916
$
503,902
(52,811 )
45,127
$
4,014
(142 )
158
$
189,915
(9,152 )
12,253
$
-
$
-
$
32,631
(9,357 )
8,776
$ 1,227,905
(71,462 )
(1,730 )
89,230
-
3
$
58,578
$
460,051
$
496,218
$
4,030
$
193,019
$
-
$
-
$
32,050
$ 1,243,946
Net balance at December 31, 2014
$ 2,283,742
$
774,459
$
131,314
$
105
$
31,659
$
1,088
$
34,183
$
20,270
$ 3,276,820
Cost
Accumulated
depreciation and impairment
-
-
-
-
3
-
-
217
Machinery and
computer
Transportation
equipment
equipment
Other
equipment
Construction
in progress
Prepayments
for equipment
Leasehold
improvements
Land
Buildings
Total
Balance at January 1,2013
Additions
Reclassifications
Disposals
$ 2,306,863
20,133
29,957
-
$ 1,206,263
34,057
2,447
-
$
688,513
42,495
5,437
(117,385 )
$
4,291
105
(119 )
$
234,281
17,859
(26,401 )
$
9,529
54,167
(46,312 )
-
$
23,524
59,381
(39,360 )
-
$
72,851
95
(12,232 )
$ 4,546,115
228,292
(47,831 )
(156,137 )
$ 2,356,953
$ 1,242,767
$
619,060
$
4,277
$
225,739
$
17,384
$
43,545
$
60,714
$ 4,570,439
Balance at January 1,2013
Disposals
Reclassifications
Depreciation expense
$
58,578
-
$
415,657
745
22,463
$
554,677
(110,955 )
60,180
$
3,944
(119 )
189
$
204,690
(26,251 )
11,476
$
-
$
-
$
29,791
(8,816 )
11,656
$ 1,267,337
(146,141 )
745
105,964
$
58,578
$
438,865
$
503,902
$
4,014
$
189,915
$
-
$
-
$
32,631
$ 1,227,905
$ 2,298,375
$
803,902
$
115,158
$
263
$
35,824
$
17,384
$
43,545
$
28,083
$ 3,342,534
Cost
Accumulated
depreciation and impairment
The above items of property and equipment were depreciated on a straight-line basis over the following
estimated useful lives:
Building
Main building
Decorating of buildings
Machinery and computer equipment
Transportation equipment
Other equipment
Leasehold improvements
5-60 years
2-5 years
1-7 years
2-6 years
1-5 or 20 years
3-5 years
16. INTANGIBLE ASSETS
Operation Concession
Value of
Branch
Core
Channel
Deposits
Value
Total
Computer
Software
Goodwil1
Total
Cost
Addition
Acquired
Reclassifications
Disposals
$ 1,825,036
$ 444,554
$ 2,269,590
$ 685,137
$
24,174
-
-
-
73,469
36,739
-
$ 1,825,036
$ 444,554
$ 2,269,590
$ 795,345
$
22,641
$ 3,087,576
Amortization expense
Disposals
$
4,850
-
$
74,091
17,099
-
$
78,941
17,099
-
$ 462,119
139,073
-
$
24,174
(1,533)
$ 565,234
156,172
(1,533)
$
4,850
$
91,190
$
96,040
$ 601,192
$
22,641
$ 719,873
$ 1,820,186
$ 2,173,550
$ 194,153
$
-
$ 2,367,703
(1,533)
$ 2,978,901
73,469
36,739
(1,533)
Accumulated
amortization and impairment
218
$ 353,364
Operation Concession
Branch
Value of
Channel
Core
Total
Value
Deposits
Computer
Software
Goodwil1
Total
Cost
Additions
Acquired
Reclassifications
$ 1,825,036
$ 444,554
$ 2,269,590
$ 606,899
-
-
-
48,157
30,081
$ 1,825,036
$ 444,554
$ 2,269,590
$ 685,137
Amortization expense
Impairment loss
$
4,850
-
$
56,993
17,098
-
$
61,843
17,098
-
$
4,850
$
74,091
$
$ 1,820,186
$
24,174
$ 2,900,663
-
48,157
30,081
$
24,174
$ 2,978,901
$ 339,209
122,910
-
$
22,641
1,533
$ 423,693
140,008
1,533
78,941
$ 462,119
$
24,174
$ 565,234
$ 2,190,649
$ 223,018
$
-
$ 2,413,667
Accumulated
amortization and impairment
$ 370,463
a. The aforementioned operation concession was assumed from KSCC on September 1, 2009. The Bank
recorded the transaction based on the purchase price allocation report provided by external independent
specialist analyzing the allocated value of the purchase price. In addition, the amortization for the
years ended December 31, 2014 and 2013 was included in operating expenses.
The operation concession consists of the branch channel value and the value of core deposits on the
aforementioned acquisition transaction. The Bank assessed that the branch channel value is an
intangible asset with indefinite useful life since it is expected to have a continuous benefit of net cash
inflows.
The above items of intangible assets were amortized on a straight-line basis over the following
estimated economic lives:
Operation concession - value of core deposits
Computer software
26 years
3-8 years
b. TCSC additionally acquired 48% shareholding of TCFC’s shares from TCFC’s other stockholders from
December 2011 to January 2012 and the acquisition cost is in excess of the fair value of the identifiable
net assets acquired with $1,533 thousand recognized as goodwill. After estimating impairment, TCSC
recognized impairment loss of $1,533 thousand for the year ended December 31, 2013. Then, TCSC
received return of investment and removed from the books the investment account in April 2014.
17. OTHER NON-OPERATING ASSETS, NET
Land
Building
Total
Cost
$
70,765
$
35,148
$ 105,913
(Continued)
219
Land
Reclassifications
$
Building
14,633
85,398
$
Total
8,425
43,573
$
23,058
128,971
Accumulated depreciation
Depreciation
Reclassifications
-
3,187
749
1,730
5,666
3,187
749
1,730
5,666
Accumulated impairment
-
-
-
$
37,907
$ 123,305
$
39,317
(2,447)
(1,722)
35,148
$ 188,686
(32,404)
(50,369)
105,913
(3,625)
746
(856)
548
(3,187)
(3,625)
746
(856)
548
(3,187)
Net balance at December 31
$
85,398
Cost
Reclassifications
Disposals
$ 149,369
(29,957)
(48,647)
70,765
Accumulated depreciation
Reclassifications
Depreciation
Disposals
-
Accumulated impairment
Disposals
Net balance at December 31
(1,357)
1,357
$
70,765
$
31,961
(1,357)
1,357
$ 102,726
(Concluded)
18. OTHER ASSETS - MISCELLANEOUS
December 31
2014
Collaterals assumed, net
Temporary payments
Pending settlement payments
Others
$
2013
13,647
62,396
59,959
4,117
$
13,647
15,041
5,033
$ 140,119
$
33,721
At December 31, 2014 and 2013, collaterals assumed were net of allowance for decline in market value of
$8,398 thousand and $18,638 thousand, respectively.
220
After evaluating in fair value of collaterals assumed, the Bank reversed $10,240 thousand of the impairment
loss recognized in prior years, and recognized $51,923 thousand of gain on disposal. In addition, the Bank
recognized impairment loss $3,408 thousand in 2013.
19. DUE TO THE CENTRAL BANK AND OTHER BANKS
December 31
2014
Deposits from Chunghwa Post Co., Ltd.
Call loans from banks
Bank overdrafts
Due to banks
$
2013
8,598,931
8,326,288
1,024,211
53,499
$ 10,508,148
7,376,513
1,228,337
1,010,000
$ 18,002,929
$ 20,122,998
20. SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
December 31
2014
Bills
Government bonds
Corporate bonds
$
2013
7,104,879
6,916,699
4,772,646
$ 10,756,486
3,655,553
5,635,928
$ 18,794,224
$ 20,047,967
Contract repurchase amounts and interest rates were as follows:
December 31
Agreed upon price to repurchase
Interest rate (%)
2014
2013
$ 18,804,345
$ 20,067,683
0.20-2.92
0.26-2.95
21. PAYABLES
December 31
Financial instruments transaction payable
Accounts payable - factoring
Receipts payable under custody
Checks for clearing
Accrued expenses
Accrued interest
Short sale proceeds payable
Acceptances
Taxes payable
Notes receipts payable under custody
Others
2014
2013
$ 1,483,263
1,281,163
1,165,903
1,088,562
963,690
763,437
278,351
175,823
88,648
443,161
$ 1,658,489
2,953,306
414,487
954,998
781,109
670,019
287,267
428,431
53,382
281
396,427
$ 7,732,001
$ 8,598,196
221
22. DEPOSITS AND REMITTANCES
December 31
Deposits
Savings
Time
Demand
NCD
Checking
Remittances
2014
2013
$ 133,839,465
158,318,984
45,596,585
3,546,300
2,005,771
283,747
$ 126,589,686
154,369,234
53,140,298
3,197,800
2,901,070
313,161
$ 343,590,852
$ 340,511,249
23. FINANCIAL DEBENTURES AND DERIVATIVE FINANCIAL LIABILITIES FOR HEDGING
December 31
2014
a. Financial debentures
Second issued in 2006
Third issued in 2006
First issued in 2009
b. Convertible financial debentures - issued in 2007
Less: Unamortized discount
c. Euro-Convertible financial debentures (2014 ECB)
$
2013
2,110,000
1,500,000
1,380,000
1,000,000
1,000,000
1,500,000
3,500,000
900,000
600,000
13,490,000
11,079,250
(1,154,699)
9,924,551
$ 23,414,551
$
2,110,000
1,500,000
1,380,000
1,000,000
1,000,000
1,500,000
8,490,000
7,500,000
(447,568)
7,052,432
-
$ 15,542,432
a. Subordinated financial debentures
1) In November 2006, the Bank issued financial debentures with no maturity date amounting to $2.11
billion at fixed interest rate of 5.5% payable annually. If the Bank does not redeem the debentures
after 10 years from the issuance date, the interest rate will be raised to 6.5%. If the Bank has no
earnings and did not declare dividends to common stock in the preceding year, the Bank is not
permitted to pay current interest and such unpaid interest is not cumulative or deferred. The
claims on such interest will become extinct. Commencing from November 27, 2016, the Bank can
redeem all the debentures at par plus unpaid interest by prior irrevocable notice to debenture holders
not more than 60 days but at least 25 days to redemption date, provided that the Bank’s capital
adequacy ratio has met the minimum ratio required by the FSC and FSC’s consent has been
obtained in advance.
222
2) In December 2006, the Bank issued financial debentures, which will mature in December 2016,
with total amount of $1.5 billion at fixed interest rate of 2.75% payable annually. If the Bank does
not redeem the debentures after 5.5 years from the issuance date, the interest rate will be raised to
2.95%. Principal is payable on maturity date.
3) In January 2010, the Bank issued financial debentures, consisting of coupon A and B, which will
mature in January 2017, with total amount of $1.38 billion. Coupon A bears fixed interest rate of
3.25% payable annually. Coupon B bears floating interest rate (90-day period of secondary
market commercial paper rate plus 1.75%, which was 2.627% on December 31, 2014 and will be
reset quarterly). Principal is payable on maturity date.
amount of $1 billion at fixed interest rate of 2.15% payable annually. Principal is payable on
maturity date.
5) In June 2012, the Bank issued financial debentures, which will mature in June 2019, with total
amount of $1 billion at fixed interest rate of 2.05% payable annually. Principal is payable on
maturity date.
6) In December 2012, the Bank issued financial debentures, which will mature in December 2019,
with total amount of $1.5 billion at fixed interest rate of 1.90% payable annually. Principal is
payable on maturity date.
amount of NT$3.5 billion at fixed rate of 2.05% annually. Principal is payable on maturity date.
8) In September 2014, the Bank issued financial debentures, which will mature in September 2021,
with total amount of NT$0.9 billion at fixed rate of 2% annually. Principal is payable on maturity
date.
9) In November 2014, the Bank issued financial debentures, which will mature in November 2021,
with total amount of NT$0.6 billion at fixed rate of 2% annually. Principal is payable on maturity
date.
Coupon B of financial debentures issued in January 2010 (see item 3) above) bears floating interest
rate, hence, the Bank engaged IRS to hedge its cash flow risk. The amounts of hedged financial
debentures were $0.2 billion. As of December 31, 2014 and 2013 the fair values of the
derivative financial liabilities for hedging were $4,179 thousand and $5,449 thousand, respectively.
The outstanding IRS contract of the Bank on December 31, 2014 was as follows:
Notional Amount
(In thousand)
Maturity Date
Range of
Interest Rates Paid
$ 200,000
January 31, 2017
2%
Range of
Interest Rates
Received
3 months CP Rate
The interest rate swap is settled on a quarterly basis. The floating interest rate of the IRS contract is
the quoted price of 90- Day CP Rate of the two-trading date before each quarter’s price resetting,
from Reuters Telerate 6165 Page.
The Bank will settle the difference between the fixed and floating interest rates on a net basis.
All IRS contracts for the exchange of floating rate interest amounts with fixed rate interest amounts
were designated as cash flow hedges in order to reduce the Bank’s cash flow exposure resulting
from variable interest rates on borrowings. The IRS and the interest payments on the financial
223
debentures occur simultaneously and the amount accumulated in equity is reclassified to profit of
less over the period that the floating rate interest payment on debt affects profit of loss.
b. Convertible financial debentures with total amount of $7.5 billion - issued in 2007
In December 2007, the Bank issued convertible financial debentures (the “2007 Debentures”) via
private offering, with total amount of $7.5 billion (with allocated issuance costs of $64,652 thousand),
and are deemed as compound financial instruments. In December 2009, the conversion price was reset
to $13.6. Due to capital reduction on August 31, 2010, and capital increases in 2012, 2013 and 2014,
the conversion price was adjusted to $14.34. Please refer to Note 27 for the main terms of issuance.
The adjustment rights for conversion prices embedded in the 2007 Debentures are presented as financial
liabilities at FVTPL (Note 8).
On July 30, 2014, the bondholders of 2007 Debentures delivered the redemption notice to the Bank and
required the Bank to redeem to the entire outstanding amount of the 2007 Debenture at par value. On
August 4, 2014, the redemption date, the Bank paid at par value of 2007 Debentures of $7.5 billion plus
accrued interest of $24,966 thousand, and recognized losses of $127,182 thousand.
c. 2014 ECB
To fulfill foreign currency commitments, strengthen financial structure, increase CAR and extend the
Bank’s operating scale. The FSC approved the application on July 24, 2014 and the Bank issued
overseas convertible senior financial debentures via private offering with total amount of US$0.35
billion and denomination of US$l00 thousand face amount or its times on August 7, 2014 (the Issue
Date). The interest rate is 1%.
The carrying amount of the 2014 ECB on the Issue Date was $9,365,632 thousand, which included in
“financial debentures” (with discount of $1,150,468 thousand, including issue costs of $13,093
thousand); the component of conversion shares, adjustment of conversion price - Downward reset
adjustment and derivative financial instruments – Redemption was $1,141,654 thousand (included in
“financial liabilities at FVTPL”) with the EIR of 2.73%. The 2014 ECB was traded in the Singapore
Exchange Limited (SEX) since August 8, 2014.
The issuance terms of the 2014 ECB are as follows:
1) Interest payments: Interest on the 2014 ECB will be paid at the rate of 1.00% per annum on the
principal amount of the 2014 ECB semiannually in arrears on February 7 and August 7 of each
year, beginning on February 7, 2015.
2) Redemption: Unless the following conditions occur, the holders of the 2014 ECB could not
require the Bank to repurchase the entire or partial amount of the 2014 ECB.
a) Unless the 2014 ECB has been early redeemed, repurchased, canceled or converted, on or after
August 7, 2016, each holder shall have the right, to require the Bank to repurchase all or any
portion of the 2014 ECB at par value within 3 months following receipt of the put notice
delivered by the holders.
b) Provided that the Bank’s shares cease to be listed on the TWSE, each holder shall have the
right, at such holder’s option, to require the Bank to repurchase all or any portion of the 2014
ECB at par.
c) If a change of control occurs with respect to the Bank, each holder shall have the right, at such
holder’s option, to require the Bank to repurchase all or any portion of the 2014 ECB at par.
224
3) Details of Conversion
a) Conversion shares:
Newly issued common shares of the Bank (the “Shares”).
b) Unless the 2014 ECB has been early redeemed, repurchased and canceled, converted or any
other condition required by regulations or trustee agreements the 2014 ECB holders are entitled
to exercise the convertible right, at the option of the bondholder at any time on or after
September 17, 2014, which is the 41th calendar day after the Issue Date, and prior to the close
of business on July 28, 2021, which is the 10th calendar day prior to August 7, 2021(the
Maturity Date) for bond conversion into Shares.
c) Conversion price: NT$10.77 per share (fixed exchange rate of NT$29.945 = US$1.00).
d) Adjustment of conversion price - Antidilution adjustment
In the event of stock dilution or conditions stated in the trustee agreements occur after the Issue
Date, the conversion price shall be adjusted in accordance with the predetermined formula
stated in the offering memorandum.
e) Adjustment of conversion price - Downward reset adjustment
On August 7 of each year after the Issue Date and prior to the maturity date (each, a “Reset
Benchmark Date”), if the average daily volume-weighted average price during the 20
consecutive trading
t
days (the “Measurement Period”) immediately preceding such Reset
Benchmark Date (the “Reset Benchmark Price”) is lower than the conversion price in effect on
such Reset Benchmark Date, the conversion price in effect on such Reset Benchmark Date shall
be adjusted in accordance with the following formula (a “Downward Reset Adjustment”).
New Conversion price (“NCP”) = Max {Reset Benchmark Price x 100.1% ; Reset Floor}
“Reset Floor” means (i) as of any date on or before the first Reset Benchmark Date, 90% of the
adjusted initial conversion price and (ii) as of any date after the first Reset Benchmark Date,
80% of the adjusted initial conversion price.
If the effective date or Reset Benchmark Date, as applicable, related to an antidilution
adjustment and the Downward Reset Adjustment occurs on the same day as another such
effective date or Reset Benchmark Date, the relevant adjustments shall be made in the order of
Antidilution Adjustment and Downward Reset Adjustment.
f) Bondholders’ entitlement to dividends: Unless and until a bondholder acquires the Shares
upon a conversion of the 2014 ECB, such bondholder will have no rights with respect to the
Shares, including any voting rights or rights to receive any regular dividends or other
distributions with respect to the Shares.
24. OTHER FINANCIAL LIABILITIES
December 31
2014
Short-term borrowings
Commercial paper payable
Long-term borrowings
2013
$
978,875
1,501,370
-
$
398,000
2,077,508
548,125
(Continued)
225
December 31
2014
Miscellaneous
Principal of structured
instruments
Deposits on short sales
Futures trader’s equity
$ 6,957,009
248,540
291,894
2013
$ 7,497,443
$ 2,518,666
239,549
362,255
$ 9,977,688
$ 3,120,470
$ 6,144,103
(Concluded)
a. Short-term borrowings
December 31
Secured borrowings
Unsecured borrowings
Syndicated bank loans (maturity during one year)
Interest rate (%)
2014
2013
$ 315,000
114,500
549,375
$ 250,000
148,000
-
$ 978,875
$ 398,000
1.20-2.00
1.20-2.35
Part of a mutual funds and time deposits of a subsidiary have been pledged to secure short-term
borrowings (please refer to Note 44).
b. Commercial paper payable, net
December 31
Commercial paper payable
Interest rate (%)
2014
2013
$ 1,502,000
630
$ 2,079,000
1,492
$ 1,501,370
$ 2,077,508
0.63-1.13
0.74-1.09
The guarantee and acceptance institutions of the aforementioned commercial paper payable include
Cathay United Bank, Union Bank, Taishin Bank, Mega Bills Finance Co., Ltd., International Bills
Finance Corp., Dah Chung Bills Finance Corp., Taching Bills Finance Corp., Taiwan Bills Finance
Corp., Grand Bills Finance Corp., and China Bills Finance Corp., etc.
Part of mutual fund of TCSC has been pledged to secure the commercial paper (please refer Note 44).
c. Long-term borrowings
December 31
Syndicated bank loan of TCSC
Less: maturity during one year
Interest rate (%)
226
2014
2013
$ 549,375
549,375
$
1.69
$ 548,125
$ 548,125
1.69
The syndicated loan was led by Chang Hwa Bank, and the overall loan period is from April 2013 to
April 2015, with total facilities of $1 billion.
According to the agreement, TCSC should at least make a loan amounting to $30 million each and
renewed before the maturity date. Loans shall be also in multiples of $10 million if it is over $30
million.
The loan periods are required to be at least 30 days but not over 180 days or exceeding the maturity date
of the agreement.
TCSC should pay the principal and interest before the maturity date and may repay the loan without
remitting cash but with new loans under the same terms as the former loan.
In addition to general agreement, TCSC is required to maintain the following financial ratios:
1) Current ratio:
2) Debt ratio:
maintain at least 100%
cannot exceed 300%
3) Net tangible asset value:
not less than $4 billion
The above-mentioned financial ratios are calculated on the basis of the semi-annual and annual
financial statements audited by accountants. As of December 31, 2014, the financial ratios of TCSC
are in compliance with the requirements.
25. PROVISIONS
December 31
2014
2013
Employee benefits
Reserve for losses on guarantees (Note 12)
Reserve for compensation
Decommissioning liabilities
$ 284,767
172,372
106,072
44,761
$ 244,320
221,488
94,914
44,712
Total
$ 607,972
$ 605,434
a. Employee benefits
December 31
Retirement benefit plans
Other long-term employee benefits
2014
2013
$ 267,939
16,828
$ 230,054
14,266
$ 284,767
$ 244,320
RETIREMENT BENEFIT PLANS
1) Defined contribution plans
The Bank and subsidiaries adopted a pension plan under the Labor Pension Act (the “LPA”), which
is a state-managed defined contribution plan. Under the LPA, an entity makes monthly
contributions to employees’ individual pension accounts at 6% of monthly salaries and wages.
227
TCF HK and Hong Kong branch make the contributions under the laws of Hong Kong.
The total expense recognized in net comprehensive income representing contributions payable to
these plans by the Bank and subsidiaries at rates specified in the rules of the plans for the years
ended December 31, 2014 and 2013 was $129,017 thousand and $123,522 thousand, respectively.
2) Defined benefit plans
The Bank and subsidiaries adopted the defined benefit plan under the Labor Standards Law, under
which pension benefits are calculated on the basis of the length of service and average monthly
salaries of the six months before retirement. The Bank and subsidiaries contribute amounts equal
to 2% of total monthly salaries and wages (4.7% for TCSC) to a pension fund administered by the
pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in
the committee’s name.
The Bank also contributes an amount equal to 6% of total monthly salaries and wages to another
pension fund which is deposited in the name of the employees’ pension plan committee.
The actuarial valuations of plan assets and the present value of the defined benefit obligation were
carried out by qualified actuaries. The principal assumptions used for the purposes of the actuarial
valuations were as follows:
December 31
Discount rate(s) (%)
Expected return on plan assets (%)
Expected rate(s) of salary increase (%)
2014
2013
1.750-2.000
1.500-2.000
2.000-2.500
1.750-2.250
1.250-2.000
2.000-3.000
The assessment of the overall expected rate of return was based on historical return trends and
analysts’ predictions of the market for the asset over the life of the related obligation, by reference
to the aforementioned use of the plan assets and the impact of the related minimum return.
Amounts recognized in profit or loss in respect of these defined benefit plans are as follows:
2014
2013
Current service cost
Interest cost
Expected return on plan assets
Past service cost
$ 10,387
14,236
(11,496)
(2,633)
$ 14,294
12,428
(10,941)
(2,633)
$ 10,494
$ 13,148
Actuarial losses (after tax) recognized in OCI for the years ended December 31, 2014 and 2013
were $39,494 thousand and $17,720 thousand, respectively. The cumulative amount of actuarial
losses recognized in OCI (after tax) as of December 31, 2014 and 2013 was $96,402 thousand and
$56,908 thousand, respectively.
The amounts included in the consolidated balance sheets for the Bank and subsidiaries’ obligations
in respect of defined benefit plans were as follows:
228
December 31
2014
2013
Present value of funded defined benefit obligation
Fair value of plan assets
Deficit
Past service cost not yet recognized
$ 829,259
(584,267)
244,992
22,731
$ 788,069
(583,678)
204,391
25,364
Provisions on defined benefit obligation
$ 267,723
$ 229,755
The above-mentioned provisions arising from defined benefit obligation included prepaid pension
and accrued pension cost as follows:
December 31
2014
Prepaid pension (included in “prepayments”)
Accrued pension cost (included in “provisions”)
$
(216)
267,939
$ 267,723
2013
$
(299)
230,054
$ 229,755
Movements in the present value of the defined benefit obligations were as follows:
2014
2013
Beginning balance
Interest cost
Actuarial losses
Benefits paid
$ 788,069
10,387
14,236
44,744
(28,177)
$ 757,553
14,294
12,428
15,511
(11,717)
Ending balance
$ 829,259
$ 788,069
Movements in the fair value of the plan assets were as follows:
2014
2013
Beginning balance
Expected return on plan assets
Actuarial losses
Contributions from the employer
Benefits paid
$ 583,678
11,496
(2,839)
20,109
(28,177)
$ 569,518
10,941
(5,838)
20,774
(11,717)
Ending Balance
$ 584,267
$ 583,678
For the years ended December 31, 2014 and 2013, the actual ritual returns on plan assets were
$8,657 thousand and $5,103 thousand, respectively.
The major categories of plan assets at the end of the reporting period were as follows:
229
December 31
2014
Cash
Equity security
Bonds
Others
2013
19.12
49.69
26.38
4.81
22.17
43.64
28.94
5.25
100.00
100.00
The Bank and subsidiaries chose to disclose the history of experience adjustments as the amounts
determined for each accounting period prospectively from the date of transition to IFRSs:
December 31, December 31, December 31,
2014
2013
2012
Present value of defined benefit
obligation
Deficit
f
Experience adjustments on plan
liabilities
Experience adjustments on plan
assets
January 1,
2012
$ 829,259
$ (584,267)
$ 244,992
$ 788,069
$ (583,678)
$ 204,391
$ 757,553
$ (569,518)
$ 188,035
$ 695,562
$ (548,107)
$ 147,455
$
95,519
$
67,630
$
50,340
$
-
$
2,839
$
5,838
$
6,904
$
-
The Bank and subsidiaries expect to make contributions of $21,581 thousand and $20,930 thousand
to the defined benefit plans during the annual periods beginning after 2014 and 2013, respectively.
OTHER LONG-TERM EMPLOYEE BENEFIT PLANS
According the Bank’s guideline of “Statute Governing the payment to Retirement, Surviving
dependents at the death of staff and Severance pay” the Bank will pay to surviving dependents of its
staff died while on duty or in accident.
The present value of the other long-term employee benefit obligation was calculated by qualified
actuaries. The principal assumptions used for the purposes of the actuarial valuations were as follows:
December 31
Discount rate(s) (%)
Expected return on plan assets (%)
Expected rate(s) of salary increase (%)
2014
2013
1.750
1.500
2.500
1.750
2.000
3.000
Amounts recognized in profit or loss in respect of other long-term employee benefit plans were as
follows:
2014
2013
Interest cost
Actuarial gains
230
$ 3,301
236
(975)
$ 2,369
201
(643)
$ 2,562
$ 1,927
Movements in the present value of the other long-term employee benefit obligations were as follows:
2014
2013
Opening other long-term employee benefit obligation
Interest cost
Actuarial gains
$ 14,266
3,301
236
(975)
$ 12,339
2,369
201
(643)
Closing other long-term employee benefit obligation
$ 16,828
$ 14,266
The other long-term employee benefit expense for the years ended December 31, 2014 and 2013 were
$2,562 thousand and $1,927 thousand (included in “Employee benefit expense”).
The amount included in the consolidated balance sheets in respect of the Bank’s obligations other
long-term employee benefit plans were as follows:
December 31
2014
2013
Present value of funded other long-term employee benefit
obligation
Deficit
f
$ 16,828
16,828
$ 14,266
14,266
Provisions on other long-term employee benefit obligation
$ 16,828
$ 14,266
The Bank chose to disclose the history of experience adjustments as the amounts determined for each
accounting period prospectively from the date of transition to IFRSs:
December 31
Present value of defined benefit obligation
Deficit
Experience adjustments on plan liabilities
Experience adjustments on plan assets
2014
2013
$ (16,828)
$
$ (16,828)
$
975
$
-
$ (14,266)
$
$ (14,266)
$
643
$
-
b. Reserve for compensation
The reserve for compensation was made as a result of the case-by-case reconciliation and appraisal
made by the Bankers’ Association of the Republic of China to settle the disputes arising from the Bank
acting as a consignee to sell structured notes issued by international institutions. The remaining cases
are still being negotiated and processed. Movements in reserve for compensation were as follows:
2014
Provisions
Payments
$
94,914
25,930
(14,772)
$ 106,072
2013
$
49,561
62,754
(17,401)
$
94,914
231
c. Decommissioning liabilities
The Bank and subsidiaries leased some offices for operating use. According to the lease contracts, the
Bank and subsidiaries are also required to restore the environment to the original condition when the
contracts for lease expire.
Movements in of provisions for decommissioning liabilities were as follows:
2014
2013
Additional Provisions recognized
Interest cost
Effect of changes in estimates
Payments
$ 44,712
$ 42,238
$ 44,761
617
(568)
361
3,570
(1,457)
$ 44,712
The Bank and subsidiaries recognized expenses of provisions of decommissioning liabilities (included
in “interest expense”) were $617 thousand and $361 thousand for the years ended December 31, 2014
and 2013, respectively.
26. OTHER LIABILITIES
December 31
Advance receipts
Collections
Guarantee deposits received
Temporary receipts
Miscellaneous
2014
2013
$ 684,782
2,284
93,540
1,203
1,611
$ 213,090
92,180
55,963
806
1,509
$ 783,420
$ 363,548
27. EQUITY
Common Stock
December 31
Numbers of shares authorized (in thousands)
Shares authorized
Number of shares issued and fully paid (in thousands)
Ordinary shares
Private placement
2014
2013
7,500,000
7,500,000
$ 75,000,000
$ 75,000,000
2,021,006
559,568
1,873,580
516,212
2,580,574
2,389,792
(Continued)
232
December 31
Shares issued
Ordinary shares
Private placement
2014
2013
$ 20,210,064
5,595,675
$ 18,735,804
5,162,118
$ 25,805,739
$ 23,897,922
(Concluded)
Fully paid ordinary shares, which have a par value of $10, carry one vote per share and carry a right to
dividends.
A total of 200,000 thousand shares of the Bank’s authorized shares were reserved for employee share
options, preferred shares with warrants and financial bonds with warrants.
On May 14, 2014 and June 10, 2013, the shareholders’ meeting of the Bank resolved to use the
undistributed earnings of $1,907,817 thousand and $1,420,188 thousand, respectively, as stock dividend of
190,782 thousand and 142,019 thousand shares, respectively. That stock dividend increased the share
capital issued and fully paid to $25,805,739 thousand and $23,897,922 thousand, and the record dates were
July 28, 2014 and August 11, 2013, respectively, as set by the Board.
In order to raise operating capital, strengthen financial structure and increase CAR, the Bank issued
common stock via private placement in December 2007:
a. Numbers of shares issuedǺ The Bank issued 588,235 thousand shares, then, reduced the number of
shares by 117,647 thousand shares as result of capital reduction in August 2010, and increased by
14,118 thousand shares, 31,506 thousand shares and 43,356 thousand shares (including 2,059 thousand
shares dividend from Rank C preferred stockholders’ participating in common shareholders’
appropriation of earnings) as result of capital increase in August 2012, August 2013 and July 2014,
respectively.
b. Issue price:
$17 per share.
c. Total amount:
$10 billion
d. Rights and obligationsǺ The rights and obligations of the private placement common shares are the
same with ordinary shares, except that the private placement common stocks can be sold only after 3
years from issue date unless the buyer is qualified under Article 43 Section 8 of the Securities and
Exchange Act.
Convertible Preferred Stock (Rank C) and Unsecured 2007 Debentures via Private Offering
The major issuance terms of the unsecured 2007 Debentures and convertible preferred stock (Rank C) via
as of end of 2007 were as follows:
private-offering
f
Major Terms
Coupon (dividend) rate
Convertible Preferred
Stocks (Rank C)
Unsecured and interest is payable at rate of Noncumulative preferred stock
and its dividend equals to
3% semiannually.
subscription price multiplied
by 3.25% annually.
Furthermore, the Rank C
2007 Debentures
(Continued)
233
Major Terms
Participation in remaining
earnings
Conversion
2007 Debentures
-
Stocks (Rank C)
Stockholders cannot
participate in the dividends
appropriation of Rank C
stock in the conversion year,
instead they can participate
in common stockholders’
appropriation of earnings and
capital surplus.
The Rank C stockholders are
entitled to participate in the
dividends appropriation
equally when dividend per
common stock exceeds
dividend per Rank C share.
One year later after the
a. Except as provided in letter b. below,
settlement date, stockholders
the debenture holders are entitled to
could convert each Rank C
convert the 2007 Debentures into
share into one share of
common stocks of the Bank from next
common stock.
year after the issuance date to ten days
before the maturity date. The board of
directors can approve earlier conversion
if the 2007 Debenture holders ask for it.
The 2007 Debenture holders can
participate in the last year’s
appropriation of earnings upon
conversion at least three trading days
prior to the declaration date of the
distributed dividends.
b. Periods restricted for conversion:
1) Period from at least three trading
days prior to the non-transferring
declaration date of stock dividends,
cash dividends or capital increase by
cash contribution to the target date
of the distributed dividends;
2) Period from the record date of
capital reduction to one trading day
prior to replacement of old share
certificates by new ones;
3) Other stipulated non-transferring
periods.
(Continued)
234
Major Terms
2007 Debentures
Stocks (Rank C)
c. Adjustment of price: The original
conversion price is $17 and it will be
adjusted according to the achievement
of target net income (equals to net
income after tax less income tax benefit
from accumulated deficits) which is
calculated based on the audited
non-consolidated annual financial
statements as follows:
1) The conversion price will be
adjusted to $13.44 if the annual
target net income is less than $5.5
billion but more than or equal to
$5.3 billion.
2) The conversion price will be
adjusted to $11.55 if the annual
target net income is less than $5.3
billion.
The related target net income and
adjustment of price follow article 11 of
the convertible debentures contract.
After issuing the 2007 Debentures,
conversion prices can be adjusted if
permitted under the articles on
anti-dilution, there is appropriation of
cash dividends, any kind of new
security which is entitled to convert to
or subscribe common stock at less than
market price is issued, and there is
capital reduction which did not result
from cancellation of treasury stocks.
d. Reset of price upon conversion: the
conversion price must be reset down but
couldn’t be reset up, according to the
last 20 consecutive trading days’
average closing price of each
anniversary year from the issuance date.
The reset conversion price is limited to
90% and 80% of the original conversion
price for first anniversary year and the
succeeding years after the issuance date,
respectively. The 2007 Debenture
holders may choose either the reset of
price or the adjustment of price.
(Continued)
235
Major Terms
2007 Debentures
Maturity and put options
Maturity date is December 20, 2014 (7
years); the investors are entitled to
exercise put options at par after 5 years
(from December 20, 2012 to the maturity
date).
Redemption
Without redemption, unless the debenture
holders’ permission is obtained.
Dividend adjustment
-
Stocks (Rank C)
Perpetual Rank C without
maturity date.
After 10 years from the
issuance date, the Bank could
redeem the outstanding Rank
C at the subscription price $4
billion. (Note)
After
f 10 years from the
issuance date, dividend rate
of Rank C will be increased
to the highest limit allowed
by the related laws.
Anti-dilution
Pursuant to the articles of anti-dilution, the Besides the other stipulated
commitments, the articles of
conversion price must be reset if the
anti-dilution for common
Bank increases capital by contributing
stock which the laws of the
cash, stock dividends, capital surplus,
ROC allow are applied the
employees’ bonus, consolidation or
same way to Rank C. If the
acquisition, stock split and issuing GDR,
Bank increases capital by
etc.
issuing common stocks at a
subscription price lower than
Rank C, such shares issuance
must be approved in advance
by the stockholders of Rank
C.
Request for allocation of
assets
Unsecured debentures, but prior to
Second to shareholders of Rank
B preferred stocks, but prior
subordinated ones, and the same rank as
to shareholders of common
the unsecured creditors
stock, and limited to issuance
price.
Voting right, being elected
right and preemptive right
Reduction of capital
-
Rank C preferred stockholders
have no voting right and
being elected right unless
they are in Rank C preferred
stockholders’ meeting or the
discussion issues which will
be decided are related to their
equity. (Note)
When reducing capital, the
When reducing capital other than by
Bank should increase Rank C
cancellation of treasury stocks, the Bank
preferred stockholders’
should adjust conversion price on the
record date of capital reduction according equity with the same
percentage of reducing
to the 2007 Debenture contract.
(Continued)
236
Major Terms
2007 Debentures
Stocks (Rank C)
Capital, so that they can
maintain the same return
with the original issuance
terms including dividend and
redemption amount. (Note)
(Concluded)
Note: In order to make the meaning of the issue terms of Rank C preferred stock clearer, on May 14,
2014, the shareholders’ meeting of the Bank’s common stockholders and Rank C preferred
stockholders resolved to revise the issue terms of Rank C preferred stock in Articles of
Incorporation. Furthermore, Rank C preferred stockholders will no longer have voting right and
being elected right in the common shareholders’ meeting since that day.
According to the issuance terms, the conversion prices (refer to topic Conversion c. on the table above) of
the 2007 Debentures were $17, $13.44 and $11.55. Furthermore, after the record date of the Bank’s
capital reduction and capital increase by stock dividends on August 31, 2010, August 12, 2012, August 11,
2013 and July 28, 2014, the conversion prices were adjusted to $17.92, $14.17 and $12.18 according to the
anti-dilution terms.
In 2009 and 2008, according to the issuance terms, the conversion price of $17 was reset twice and became
$13.60. After capital reduction on August 31, 2010 and capital increase by stock dividends on August 12,
2012 and August 11, 2013, the conversion prices were adjusted to $14.34.
Convertible Preferred Stocks (Rank C, $10 par value per share) were issued by the Bank via private
offering, with $17 per share and total amount of $4 billion (with allocated issuance cost of $34,481
thousand), and total registered shares decreased from 235,294 thousand shares to 188,235 thousand shares
after capital reduction. In addition, Rank C stock’s annual dividend rate was adjusted from 3.25% to
4.0625%.
Rank C stocks were deemed as compound financial instruments and were separated and presented as
follows :
December 31
2014
2013
$ 1,649,600
14,220
$ 1,649,600
14,220
$ 1,635,380
$ 1,635,380
$ 2,350,400
20,261
$ 2,350,400
20,261
470,588
470,588
$ 1,859,551
$ 1,859,551
a. Liability component
Preferred stock liability
Less: Issuance cost
b. Equity component
Capital surplus - convertible right
Less: Issuance cost
Offsetting of the deficit by capital reduction in August
2010
237
Because dividend per common stock exceeds dividend per Rank C share, Rank C preferred stockholders
acquire $20,588 thousand (2,059 thousand shares) derived from Rank C preferred stockholders’
participating in common stockholders’ appropriation of dividends.
As of December 31, 2014, none of the Rank C preferred stocks was converted.
The Bank has made provision for the interest of Rank C preferred stock with total amount of $130,000
thousand in accordance with Articles of Incorporation and the issuance terms for the years ended December
31, 2014 and 2013, respectively.
Capital Surplus
A reconciliation of the carrying amount for the years ended December 31,2014 and 2013, for each class of
capital surplus was as follows:
Treasury
stock
transactions
31,513
Other
Excess of the
consideration
paid over the
carrying
Employee
Employee
amount of the
benefit options
Conversion
subsidiaries benefit options
expired
right - Rank C
$
108
$
117,574
Arising from recognition of employee
share options by the Bank
Arising from invalid employee benefit
options
Arising from shares transferred to
employees
Treasury stock transaction made by
subsidiaries
$
-
-
4,605
$
70,871
$
108
$
148,055
$
16,858
$ 1,859,551
$ 2,095,443
Arising from recognition of employee
share options by the Bank
Arising from invalid employee benefit
options
Arising from shares transferred to
employees
Treasury stock transaction made by
subsidiaries
Excess of the consideration paid over the
carrying amount of the subsidiaries’
net assets
$
936
$
-
$
71,151
$
-
$ 1,859,551
$ 1,931,638
$
-
-
43,798
-
-
(13,317))
(13,317
34,753
-
4,605
-
-
-
-
-
49,964
-
-
(3,541))
(3,541
25,856
-
4,721
31,513
$
$
Total
3,541
$ 1,859,551
$ 2,012,287
-
-
43,798
13,317
-
-
-
-
34,753
-
-
49,964
3,541
-
-
-
-
-
25,856
-
-
-
-
4,721
108
-
-
-
108
3,541
$ 1,859,551
$ 2,012,287
108
$
117,574
$
The capital surplus arising from shares issued in excess of par (including treasury share transactions and
excess of the consideration received over the carrying amount of the subsidiaries’ net assets during disposal
or acquisition) may be used to offset a deficit; in addition, when the Bank has no deficit, such capital
surplus may be distributed as cash dividends or transferred to capital limited to a certain percentage of the
Bank’s capital surplus and once a year. Besides, as required by the Banking Bureau’s letter dated June 6,
2012 (Ref. NO.10110002690), the Bank should get FSC’s permission before capital surplus can be
distributed as cash dividends.
The capital surplus from equity investments under the equity method, employee benefit options, issuance of
debentures and convertible preferred stocks cannot be distributed for any purpose.
Retained Earnings and Dividend Policy
The Bank’s Articles of Incorporation provide that the Bank shall appropriate its annual earnings, after
offsetting the deficit, as follows:
238
a. Under the Banking Law, legal reserve is required until the reserve equals the paid-in capital.
b. Special reserve is required under other laws.
c. Appropriation of preferred stock dividends.
d. After retaining some of accumulated earnings for operational purpose, the remainder will be distributed
as follows: Dividends to stockholders from 94% to 98%; remuneration to directors and supervisors
from 1% to 3%; and bonus to employees from 1% to 3%.
e. Upon the distribution of the aforementioned dividends to stockholders, stock dividends may be
distributed within 50% of total distribution of earnings. But the actual amounts, types and ratios of
distribution of earnings should be proposed by the Board and resolved by the stockholders in
consideration of the Bank’s actual profit and fund conditions. Legal reserve is appropriated from
retained earnings until its balance equals the Bank’s paid-in capital. The total cash earnings
distribution (referring to total amount of dividends to stockholders paid in cash, remuneration to
directors and supervisors and cash bonus to employees) shall not exceed 15% of the Bank’s paid-in
capital except when the balance of legal reserve has reached the Bank’s paid-in capital.
f. Distribution of the aforementioned share bonus to employees includes certain subsidiaries that meet
certain conditions as required and approved by the board of directors.
For the year ended December 31, 2014, the bonus to employees and the remuneration to directors and
supervisors accrued by the Bank were $22,500 thousand and $36,000 thousand, respectively, which were
1.05% and 1.68%, respectively, of earnings; the amounts were estimated to be distributed according to the
Bank’s Articles of Incorporation. For the year ended December 31, 2013, the bonus to employees and the
remuneration to directors and supervisors accrued by the Bank were $22,500 thousand and $36,000
thousand which represented 1.14% and 1.83% of earnings, respectively. Material differences between
such estimated amounts and the amounts proposed by the board of directors on or before the consolidated
financial statements are authorized for issue are adjusted in the year the bonus and remuneration were
recognized. If there is a change in the proposed amounts after the consolidated financial statements are
authorized for issue, the differences are recorded as a change in accounting estimate. If a share bonus is
resolved to be distributed to employees, the number of shares is determined by dividing the amount of the
share bonus by the fair value of the shares. For the calculation of the number of shares, the fair value of
the shares refer to [the closing price (after considering the effect of cash and share dividends) of the shares
on the day immediately preceding the shareholders’ meeting.
Under Rule No. 100116, Rule No. 0950000507 and Rule No.1010047490 issued by the FSC, an amount
equal to the net debit balance of shareholders’ other equity items (including exchange differences on
translating foreign operations, unrealized gain (loss) on AFS financial assets, and the gain or loss on the
hedging instrument relating to the effective portion of cash flow hedge) and the difference if the Bank’s
share market price is lower than the carrying value of the Bank’s shares held by subsidiaries, shall be
transferred from unappropriated earnings to a special reserve before any appropriation of earnings
generated made. Any special reserve appropriated may be reversed to the extent of the decrease in the net
debit balance.
The Bank appropriates or reverses a special reserve in accordance with Rule No. 1010012865 issued by the
FSC and the directive entitled “Questions and Answers on Special Reserves Appropriated Following the
Adoption of IFRSs”. Distributions can be made out of any subsequent reversal of the debit to other equity
items.
The appropriation of earnings to legal reserve shall be made until the legal reserve equals the Bank’s
paid-in capital. Legal reserve may be used to offset deficit. If the Bank has no deficit and the legal
reserve has exceeded 25% of the Bank’s paid-in capital, the excess may be transferred to capital or
distributed in cash. However, it needs to be approved by the FSC if distributed in cash.
239
The appropriations of earnings for 2013 and 2012 had been approved in the shareholders’ meeting on May
14, 2014 and June 10, 2013, respectively, and the appropriation for Rank C’s dividends was $130,000
thousand in accordance with the Bank’s Articles of Incorporation. The appropriations of earnings and
dividends per share were as follows:
Appropriations of Earnings
2013
2012
Legal reserve
Stock dividends
Rank C preferred
Common stock
$
796,895
20,588
1,887,229
$
Dividends Per Share (NT$)
2013
2012
519,378
(342,763)
1,420,188
$ 0.11
0.80
$
0.65
When dividend per common stock exceeds dividend pre Rank C share, the Rank C stockholders are entitled
to participate in the dividends appropriation equally.
Bonus to employees and remuneration to directors and supervisors for 2013 and 2012 approved in the
shareholders’ meetings were as follows:
Cash Dividends
2013
2012
Bonus to employees
Remuneration of directors and supervisors
$ 22,500
36,000
$ 15,000
24,000
There were no differences between the approved amounts and the accrual amounts of the bonus to
employees and the remuneration of directors and supervisors in the financial statements for the years ended
December 31, 2013 and 2012.
The appropriations of earnings for 2014 had been proposed by the Board on March 26, 2015, and the
appropriation for Rank C’s dividends was $130,000 thousand. The appropriations of earnings and
dividends per share were as follows:
Appropriations
of Earnings
Legal reserve
Stock dividends
Common stock
Rank C preferred (participation in the dividends appropriation of
common stock)
$
790,529
Dividends Per
Share (NT$)
$
-
2,064,459
0.80
20,588
0.11
The appropriations of earnings, the bonus to employees, and the remuneration to directors and supervisors
for 2014 are subject to the resolution in the shareholders’ meeting to be held in June 2015.
Information on the bonus to employees, directors and supervisors proposed by the Board is available on the
Market Observation Post System website of TWSE.
240
Other equity items
2014
2013
Exchange differences on translating
the financial statements of foreign operations
Exchange differences arising on translating the financial statements
of foreign operations
Income tax relating to gains arising on translating the financial
statements of foreign operations
$
(25,483)
54,139
$
$
19,431
$
(25,483)
Unrealized gain arising on revaluation of AFS financial assets
Cumulative gain reclassified to profit or loss on AFS financial assets
$
201,557
190,451
(131,933)
$
133,073
111,816
(43,332)
$
260,075
$
201,557
(9,225)
(56,925)
35,343
(3,901)
Unrealized gain (loss) on AFS financial
assets
f
Cash flow hedge
Gain arising on changes in fair value of hedging instruments entered
in to for cash flow hedges - IRS
Income tax related to cash flow hedges
$
$
(4,522)
1,270
$
(217)
(3,469)
(6,681)
2,601
(442)
$
(4,522)
Non-controlling interest
Attributable to non - controlling interest
Share of profit for the year
Unrealized (losses) gains on AFS financial assets
Actuarial gains on defined benefit plans
Returning cash by TCFC to non-controlling interests
Non-controlling interests arising from acquisition of the subsidiary
(Note 38)
Cash dividends
$ 3,161,749
$ 3,147,670
131,844
(8,538)
1,924
(83,182)
(56,127)
$ 3,055,496
82,781
18,167
5,523
(218)
$ 3,161,749
Treasury Shares
In October 2012 and in September 2011, the Board approved a treasury stocks plan (“the Plan”) to purchase
the Bank’s common share in accordance with the Securities and Exchange Law Enforcement Rules, and the
Bank will transfer those shares to employees one time or several times within three years since December
25, 2012 and November 24, 2011, respectively. The chairman of the Bank was authorized to approve the
conversion period and executive details of the plan.
241
The Bank’s shares held by TCSC were accounted for as treasury share. Movements in treasury share for
the years ended December 31, 2014 and 2013 were summarized as follows:
Purpose of
Treasury Stock
Shares
Amount
Addition During the Year
Shares
Amount
Reduction During the Year
Shares
Amount
Shares
Amount
For the Year Ended
December 31, 2014
For transfer to
employees
The Bank’s shares held
by its subsidiaries
62,869
$
604,553
-
45,220
833
3,977
(2,043 )
(16,568 )
4,020
68,099
$
649,773
833
$
3,977
(34,157 )
$ (304,872 )
79,937
$
748,862
-
$
-
(17,068 )
$ (144,309 )
66,427
433
$
815,289
433
5,230
$
-
(32,114 )
$ (288,304 )
30,755
$
316,249
34,775
$
348,878
62,869
$
604,553
$
649,773
32,629
For the Year Ended
December 31, 2013
For transfer to
employees
The Bank’s shares held
by its subsidiaries
7,213
87,150
$
-
(2,416 )
(21,207 )
5,230
-
(19,484 )
$ (165,516 )
68,099
45,220
According to the “Regulations Governing the Repurchased Shares for Transfer to Employees” established
by the Bank, the Bank transferred 32,114 thousand shares and 17,068 thousand shares to employees with
the price of $10-10.28 per share, and debited “capital surplus - employee share options” with the cost of
$16,401 thousand and $1,538 thousand by the fair value in March 2014 and January 2013, respectively.
The Bank’s shares held by TCSC at the end of the reporting period were as follows:
December 31
2014
Number of shares held (In thousands)
Carrying amount
Market price
$
11,530
93,566
121,642
2013
15,000
$ 129,677
162,750
The purpose of holding the Bank’s shares by TCSC is to have gains from trading.
For the years ended December 31, 2014 and 2013, TCSC sold 5,858 thousand shares and 6,929 thousand
shares in the Bank for $60,724 thousand and $74,361 thousand, respectively.
Although the Bank’s shares held by TCSC are treated as treasury stock in the financial statements, TCSC
are entitled to exercise their rights on these stocks, except participation in the Bank’s capital increase in
cash. In addition, under the Securities and Exchange Act, the Bank shall neither pledge treasury share nor
exercise shareholders’ rights on these shares, such as rights to dividends and to vote.
28. SHARE-BASED PAYMENTS ARRANGEMENTS
a. To attract, retain and motivate talents, the Board had set up an employee stock option award scheme
(“the Scheme”) on December 10, 2010 with a view to cohere employees’ loyalty to the Bank, and
thereby encouraging the convergence of their interests with those of the Bank’s stockholders. In
January 2011, the Scheme was approved by the FSC. The employees eligible ffor the Scheme include
full-time employees of the Bank and the Bank’s domestic and overseas subsidiaries which the Bank
owns at least 50% of voting shares directly or indirectly, and mainly grouped into two categories as
follows:
242
1) General employees
The candidates who are entitled to participate in the Scheme and the number of options to be
granted are recommended by the Bank’s Compensation Committee (the Committee) to the Board
based on certain factors, including but not limited to position, performance, contribution, special
achievements, seniority and other factors relevant to management.
2) Employees in key position
The vesting conditions attaching to the Scheme include position and performance achievements.
Also, the candidates are nominated by the Committee for approval by the Board.
The above employees are required to be with the Bank for two years in order to receive options. After
the second anniversary year of the grant date (post 2-year waiting period), the vesting period and
accumulated vested rights are as follows:
Vesting period
Accumulated
percentage of
vesting rights
(%)
Post the second anniversary year (Begin in the third anniversary year)
Post the third anniversary year (Begin in the fourth anniversary year)
Post the fourth anniversary year (Begin in the fifth anniversary year)
Post the fifth anniversary year (Begin in the sixth anniversary year)
40
60
80
100
The options granted to employees in key position have a five-year vesting period with 20% vested each
year, but subject to position and performance achievements. In addition, at the discretion of the Board,
the vested options held by the employees in key position can be exercised only in the event of change of
control.
In the event of change of control within the post 2-year waiting period, the remaining unvested options
could be vested and exercisable in full or partial immediately once the Board agrees. Change of
control is defined as an event where the Bank’s shareholders with control rights (the majority
shareholders) sell or transfer at least one half of their shareholdings in the Bank, and directly or
indirectly disqualified as the Bank’s largest shareholders (determined by way of regarding the equity
being diluted and converted in full). The vested options of the employees in key position can be
exercisable freely not subject to change of control event after 9.5 years from the stock option issuance
date or obtaining of approval by the Board.
The option exercise price of the Scheme shall be adjusted based on the predetermined formula to reflect
the changes in the Bank’s capital stock, such as issuance of new common shares in cash, issuance of
new common stock by capitalization of retained earnings or capital surplus, merger transactions and
share bonus to employees. The total number of options issued by the Scheme was 200,000 thousand
units, which represent one common share subscription right for each unit.
Information on employee stock options and weighted average exercise price was as follows:
f
243
For the Year Ended
December 31, 2014
Weighted
average
Number of
Exercise Price
Options
(NT$)
(In thousands)
For the Year Ended
December 31, 2013
Weighted
average
Number of
Exercise Price
Options
(NT$)
(In thousands)
Options exercised
Options forfeited
55,420
(2,318)
53,102
55,420
9,840
7,400
Options exercisable, end of
year
Weighted-average fair value of
options granted (NT$)
$
2.46
There were no options exercised by employees.
December 31, 2014 and 2013 was as follows:
$ 11.5
11.5
10.6
56,820
(1,400)
$
$ 12.3
12.1
11.5
2.48
Information about outstanding options as of
December 31
Range of Exercise Price (NT$)
Weighted-average Remaining Contractual Life (Years)
2014
2013
$ 10.6
$ 11.5
2
3
After the record date of the Bank’s capital increase by stock dividends on July 28, 2014 and on August
11, 2013, the exercise prices were adjusted to $10.6 and $11.5, respectively.
Options granted were priced using the binomial option pricing model and the key inputs to the model
were as follows:
Grant-date share price (NT$)
Exercise price (NT$)
Expected volatility
Control premium
Suboptimal exercise factor
Expected life (years)
Expected dividend yield
Risk-free interest rate
12.7
12.7
48.01%
51.6%
1.30
5
0%
1.5375%
Expected volatility was based on the historical share price volatility over past years.
Compensation cost which the Bank recognized for the years ended December 31, 2014 and 2013 was as
follows:
2014
2013
Recognized for the year
Reversal for the year
244
$ 20,901
-
$ 25,306
-
$ 20,901
$ 25,306
Because the waiting period of the employee stock options was ended in January 2013, the cost of the
employee stock option forfeited in the amount of $6,104 and $3,304 thousand was reversed for the
years ended December 31, 2014 and 2013, respectively.
b. Since the year of 2011, the Bank employed continually some managers in key position (the
“Managers”) and provided the long-term compensation plan to them. According to the plan, the
Managers can exercise the vested options in the event of change of control with NT$12.7 (exercise
price was adjusted according to the Scheme) per share to purchase the Bank’s treasury shares.
The major grant terms of “Compensation option” and “KPI option” were as follows:
1) “Compensation option” granted: The options granted to Managers have a five-year vesting period
with 20% vested each year since the Bank employed the Managers.
2) “KPI option” granted: The Board evaluates the comprehensive operating performance of the
Managers annually and decides to grant them options not more than 20% vested each year. If the
Managers do not reach the performance target set at beginning of each year, the Board will not
grant them in current year. However, the Board has the option to set two performance indexes to
evaluate the Managers performance. One is used to evaluate current performance, and the other is a
higher performance target, if the Managers can achieve such target, the Managers can obtain those
options not granted in the previous year.
In the event of no change of control until July 26, 2020, the “Compensation option” and “KPI option”
granted can be exercised after July 26, 2020, as approved by the Board.
Such “Compensation option” vested could be exercised within the next year and will expire after one
year, if not exercised.
Information on employee share options was as follows:
For the Year Ended
December 31, 2014
Weighted
average
Number of
Exercise
Options
Price
(In thousands)
(NT$)
Options granted
Options forfeited
Options expired
54,700
(800)
(2,000)
51,900
Options exercisable, end of
year
24,300
Weighted-average fair value of
options granted (NT$)
$
2.39
For the Year Ended
December 31, 2013
Weighted
average
Number of
Exercise
Options
Price
(In thousands)
(NT$)
$ 11.7
12.7
12.7
54,500
2,000
(1,800)
10.9
54,700
$ 12.4
12.7
12.7
11.7
15,200
$
2.39
245
Information about outstanding options was as follows:
2013
2014
Exercise Price (NT$)
“Compensation option” and “KPI option” granted
“Compensation option” granted
Weighted-average Remaining Contractual Life (Years)
Note:
$ 10.6 (Note)
12.7
3
$ 11.5
12.7
4
After the record date of the Bank’s capital increase by stock dividends on July 28, 2014, the
exercise prices were adjusted from $11.5 to $10.6.
Options granted were priced using Black-Scholes pricing model and the inputs to the model were as
follows:
Grant-date share price (NT$)
Exercise price (NT$)
Expected volatility
Expected life (years)
Expected stock dividend yield
Expected cash dividend yield
Risk-free interest rate
8.17-10.3
12.7
39.05-40.74%
5
5%
0%
1.02-1.12%
Expected volatility was based on the historical share price volatility over past years.
Considering the ratio of options forfeited by resigned personnel in key position, compensation cost
recognized were $6,496 thousand and $23,120 thousand for the years ended December 31, 2014 and
2013, respectively.
The cost of “Compensation option” that expired and had been forfeited amounted to $7,213 thousand
and $237 for the years ended December 31, 2014 and 2013, respectively.
29. NET INTEREST
2014
2013
Interest Revenue
Discount and loans
Investment securities
Credit card
Financing
Factoring receivables
Government bonds and securities purchased under agreements to
resell
Others
Total
Interest Expense
Debentures and bonds
246
$ 7,257,863
946,489
255,639
201,847
654,639
30,453
$ 7,066,318
980,152
310,928
165,358
97,312
46,573
23,276
113,560
9,483,766
25,445
140,615
8,832,701
2,870,827
821,087
2,788,911
891,427
(Continued)
2014
2013
Liability component of preferred stocks
Due to the Central Bank and other banks
Others
Total
Net interest
$
142,136
130,000
83,463
50,110
4,097,623
$ 5,386,143
$
165,193
130,000
19,953
58,230
4,053,714
$ 4,778,987
(Concluded)
30. COMMISSION AND FEE REVENUES, NET
2014
2013
Revenues
Wealth and trust management
Agent revenue
Loans
Credit card
Securities broker
Guarantee
Factoring receivables
Others
Total
$
Charges
Credit card
Interbank trading
Wealth and trust management
Securities broker
Securities dealer
Others
Total
Net interest
751,124
736,669
412,654
413,163
465,680
107,654
93,224
191,339
3,171,507
$
732,765
685,850
442,584
402,551
381,054
113,542
54,215
140,607
2,953,168
118,108
34,469
25,502
34,693
14,025
42,396
269,193
102,005
35,778
29,023
26,100
22,308
33,125
248,339
$ 2,902,314
$ 2,704,829
The Bank and subsidiaries provide custody, trust, investment management and consulting service to third
parties and are engaged in financial instruments planning, management and dealing decisions.
Investment management of customer’s trust portfolio is an independent business of the Bank and
subsidiaries. Therefore, the accounting records and financial statements are prepared for the internal
management purpose and are not included in the financial statements of the Bank and subsidiaries.
31. FOREIGN EXCHANGE (LOSSES) GAINS, NET
2014
2013
Foreign exchange gains
Foreign exchange losses
$ 288,201,569
(288,008,289)
$ 199,133,361
(199,326,671)
Net foreign exchange gains (losses)
$
$
193,280
(193,310)
247
32. OTHER NET GAINS (LOSSES)
2014
2013
Rent revenue
Gain on disposal of collaterals assumed
Reserve for compensation
Loss on disposal of non-performing assets
Return of investment of Lehman, Inc.
Gain on other financial assets
Gain on reserve of accounts
Gain (loss) on disposal of property
Others
$ 54,172
51,923
(25,929)
(23,307)
13,790
(7,166)
2,143
(1,813)
18,253
$ 46,516
9,071
(62,754)
(28,788)
28,861
7,284
33,648
16,700
Net gains
$ 82,066
$ 50,538
33. EMPLOYEE BENEFIT EXPENSE
2014
2013
Payroll
Labor and health insurance expense
Post-employment benefit
Defined contribution plans
Defined benefit plans
Share-based payment
Other long-term employee benefit
Other employee benefit
Termination benefit
$ 3,223,837
246,206
$ 2,984,755
235,742
129,017
10,494
43,798
2,562
189,439
2,100
123,522
13,148
49,964
1,927
175,948
-
$ 3,847,453
$ 3,585,006
As of December 31, 2014 and 2013, the Bank and subsidiaries had 3,204 and 3,146 employees,
respectively.
34. DEPRECIATION AND AMORTIZATION
2014
2013
Depreciation
Property and equipment
Other non-operating assets
Subtotal
Amortization
Intangible assets
Subtotal
Total
248
$
89,230
749
89,979
$ 105,964
856
106,820
156,172
133,993
290,165
140,008
116,079
256,087
$ 380,144
$ 362,907
35. OTHER GENERAL AND ADMINISTRATIVE EXPENSES
2014
2013
Rent
Taxes
Commissions and agency charges
Telephone, cable and postage
Advertising
Insurance
Repairs and maintenance
Others
$
562,071
435,973
162,074
123,217
146,901
91,569
87,412
700,167
Total
$ 2,309,384
$
561,437
300,242
161,963
124,326
107,280
93,562
88,708
666,230
$ 2,103,748
36. INCOME TAXES
a. Income tax recognized in profit or loss
The major components of tax expense were as follows:
2014
2013
Current tax
In respect of the current year
Income tax expense of unappropriated earnings
Adjustments for prior periods
$ 143,698
(6,269)
137,429
Deferred tax
In respect of the current year
Adjustments for prior periods resulting from examined by the
tax authorities
Income tax expense recognized in profit or loss
$
53,449
13,446
(5,437)
61,458
390,671
300,918
(22,581)
368,090
300,918
$ 505,519
$ 362,376
A reconciliation of accounting profit and income tax expenses is as follows:
2014
2013
Profit before tax
$ 3,272,459
$ 3,101,472
Income tax expense calculated at the statutory rate
Non-deductible (Non-taxable) expenses (profit) in determining
taxable income
Tax-exempt income
OBU
Others
$
$
557,110
505,890
11,320
(110,875)
(158,029)
(39,261)
(52,711)
(25,233)
(Continued)
249
2014
2013
Additional income tax under the Alternative Minimum Tax Act
Additional income tax on undistributed earnings
Adjustments to prior years’ tax
Unrecognized loss carryforwards
$
132,511
(6,269)
8,137
$
Income tax expense recognized in profit or loss
$
505,519
$
37,148
13,446
(5,437)
148
362,376
(Concluded)
The applicable tax rate used above is the corporate tax rate of 17% payable by the Bank and
subsidiaries in the ROC, while tax rates of 16.5% used by TCF HK are based on the tax laws in Hong
Kong.
As the status of 2015 appropriations of earnings is uncertain, the potential income tax consequences of
2014 undistributed earnings are not reliably determinable.
b. Income tax recognized in OCI
2013
2014
Deferred tax
Recognized in OCI
Translation of foreign operations
Fair value changes of hedging instruments for cash flow
hedges
Actuarial gains and losses on defined benefit plan
Total income tax recognized in OCI
$ (9,225)
$ (3,902)
(217)
8,089
(442)
3,629
$ (1,353)
$
(715)
c. Current tax assets and liabilities
December 31
2014
2013
Current tax assets
Tax refund receivable
$ 114,749
$ 163,088
Current tax liabilities
Income tax payable
$
$
37,650
60,684
d. Deferred tax assets and liabilities
The movements of deferred tax assets and deferred tax liabilities were as follows:
Opening Balance
Recognized in
Profit or Loss
Recognized in
OCI
Reclassifications
Closing Balance
Deferred Tax Assets
Temporary differences
Losses on investment of overseas subsidiaries
Doubtful loans and receivables
Defined benefit obligation
$
72,516
527,156
47,842
$
550
(152,643)
(152,643 )
(1,632)
(1,632 )
$
-
$
(3,109)
(3,109 )
$
73,066
374,513
43,101
(Continued)
250
Opening Balance
Exchange difference on foreign operations
Others
Recognized in
Profit or Loss
Recognized in
OCI
Reclassifications
Closing Balance
$
21,301
64,541
733,356
1,662,476
$
1,668
(152,057
(152,057))
(348,695
(348,695))
$
(9,225))
(9,225
8,460
(765)
(765 )
-
$
(3,109)
(3,109 )
-
$
12,076
74,669
577,425
1,313,781
$
2,395,832
$
(500,752
(500,752))
$
(765
(765))
$
(3,109
(3,109))
$
1,891,206
$
156,395
28,218
4,095
$
(156,395
(156,395))
21,943
1,790
$
588
$
(3,109)
(3,109 )
$
50,161
3,364
$
188,708
$
(132,662
(132,662))
$
588
$
(3,109
(3,109))
$
53,525
Available losses carryforwards
Deferred Tax Liabilities
Intangible assets
FVTPL financial assets
Others
(Concluded)
Opening Balance
Recognized in
Profit or Loss
Recognized in
OCI
Reclassifications
Closing Balance
Deferred Tax Assets
Losses on investment of overseas subsidiaries
Doubtful loans and receivables
Defined benefit obligation
Exchange difference on foreign operations
Others
$
71,631
527,156
48,368
25,203
54,999
727,357
1,927,509
5,161
$
885
(526 )
3,119
3,478
(265,033 )
(5,161 )
$
(3,902 )
4,924
1,022
-
$
1,499
1,499
-
$
72,516
527,156
47,842
21,301
64,541
733,356
1,662,476
-
$
2,660,027
$
(266,716 )
$
1,022
$
1,499
$
2,395,832
$
120,801
28,090
2,379
$
35,594
128
(1,520 )
$
1,737
$
1,499
$
156,395
28,218
4,095
$
151,270
$
34,202
$
1,737
$
1,499
$
188,708
Available losses carryforwards
Investment credits
Deferred Tax Liabilities
Intangible assets
FVTPL financial assets
Others
e. Deductible temporary differences and unused loss carryforwards for which no deferred tax assets have
been recognized in the consolidated balance sheets
December 31
2014
Loss carryforwards
Expire in 2017
Expire in 2018
Expire in 2019
Expire in 2020
Expire in 2021
Expire in 2022
Expire in 2023
Deductible temporary differences
Unrealized impairment losses on financial assets
$
56,274
13,794
92,537
11,146
618
2013
$
85
49,415
131,341
52,176
2,264
3,963
$ 174,369
$ 239,244
$ 129,299
$ 128,999
f Information about unused investment credits, unused loss carry-forward and tax-exemption
f.
Loss carryforwards as of December 31, 2014 comprised of:
251
Unused Amount
TCIFI
TCGIA
The Bank
$
Total
Expiry Year
345,472
5,809,278
430,365
1,199,276
-
$
13,794
92,537
11,146
-
$
618
$
345,472
5,809,278
430,365
1,213,070
92,537
11,146
618
$ 7,784,391
$
117,477
$
618
$ 7,902,486
2016
2017
2018
2019
2020
2021
2023
The expiry year of TCFC’s loss carryforwards was before August in 2014 because the liquidation
process has been finished.
g. Integrated income tax
December 31
2014
Undistributed earnings generated before January 1,1998
Undistributed earnings generated on and after January 1,1998
Imputation credit accounts
$
2,965,796
2013
$
3,076,831
$ 2,965,796
$ 3,076,831
$
$
128,794
87,815
The creditable ratio for distribution of earnings of 2014 and 2013 was 4.34% (expected ratio) and
3.09% (actual ratio).
Under the Income Tax Law, for distribution of earnings generated after January 1, 1998, the imputation
credits allocated to ROC resident shareholders of the Bank is calculated based on the creditable ratio as
of the date of dividend distribution. Nevertheless, since 2015, for distribution of earnings, the
imputation credits allocated to ROC resident shareholders (natural person) of the Bank only one half of
amounts calculated based on the creditable ratio. Nonresident shareholders can only be allowed a tax
credit from the 10% income tax paid on the undistributed earnings, which can be used as deduction of
the withholding income tax on dividends paid. The actual imputation credit allocated to shareholders of
the Bank is based on the balance of the Imputation Credit Account (ICA) as of the date of dividend
distribution. Therefore, the expected creditable ratio for the 2014 earnings may differ from the actual
creditable ratio to be used in allocating imputation credits to the shareholders.
According to legal interpretation No. 10204562810 announced by the Taxation Administration of the
Ministry of Finance, when calculating imputation credits in the year of first-time adoption of IFRSs, the
cumulative retained earnings include the net increase or net decrease in retained earnings arising from
first-time adoption of IFRSs.
h. Income tax assessments
Except 2013, the tax authorities had examined the income tax returns of the Bank. However, the Bank
had applied for administrative litigations in regard to the bonus premium amortization of $140,751
thousand (included in interest revenue as a deduction) in 2006 and 2007, income tax returns. As of the
date of the auditors’ report, the appeal for the tax returns of 2007 and 2006 were dismissed by the
Supreme Administrative Court and the lawsuit was terminated. The Bank has been preparing to apply
252
for Grand Justice’s Annotation. The Bank recognized in 2006 and 2007 the tax effect amounting to
$23,928 thousand.
In order to protect the stockholders’ equity, the Bank applied for administrative litigations in regard to
interest revenues of bonds and amortization expenses of the operation concession in intangible assets in
2012 income tax returns, which had examined by the tax authorities.
The years for which income tax returns had been examined by the tax authorities were as follows:
TCSC and its subsidiaries
TCIFI
TCLIA
TCGIA
2012
2012
2013
2012
37. EARNINGS PER SHARE
2014
2013
Basic EPS (NT$)
Diluted EPS (NT$)
$
1.04
0.89
$
1.06
0.86
When the Bank calculated earnings per share (EPS) of 2014 and 2013, employee share option was
anti-dilutive and excluded from the computation of diluted earnings per share.
The earnings and weighted average number of ordinary shares outstanding in the computation of earnings
per share were as follows:
a. Earnings for the period attributable to shareholders of the Bank
2014
2013
Earnings used in the computation of basic EPS
Add: Effect of dilutive potential common stock
Rank C preferred stock
2007 Debentures
2014 ECB
$ 2,635,095
Earnings used in the computation of diluted EPS
$ 3,035,387
130,000
148,420
121,872
$ 2,656,315
130,000
(24,033)
$ 2,762,282
b. Weighted average number of common stocks outstanding (in thousands)
2014
2013
Weighted average number of issued common stock, beginning of
the year
Add: Retroactive adjustment for stock dividends distributed,
2012
Retroactive adjustment for stock dividends distributed,
2013
Less: Effect of treasury shares
Number of shares used to calculate basic EPS
$ 2,389,792
$ 2,247,773
-
142,019
190,782
(42,606)
2,537,968
181,202
(71,664)
2,499,330
(Continued)
253
2014
2013
Add:
Effect of dilutive potential common stocks:
2007 Debentures
2014 ECB
Rank C preferred stock
Bonus to employees
Weighted average number of common stocks used in the
computation of diluted EPS
$
308,076
391,923
188,235
3,192
$ 3,429,394
$
523,013
188,235
2,931
$ 3,213,509
(Concluded)
The weighted average number of shares outstanding used for the EPS computation had been adjusted
retroactively for the capital increase on July 28, 2014, the record date. The earnings per share before
and after the retroactive adjustment were as follows:
For the Year Ended
December 31, 2013
Before
After
Retroactively adjustment
Basic EPS (NT$)
Diluted EPS (NT$)
$
1.15
0.92
$
1.06
0.86
If the Bank can settle bonus to employees in either cash or shares, the Bank presumes the entire amount
of the bonus would be settled in shares and the resulting potential shares are included in the weighted
average number of shares outstanding used in the computation of diluted EPS, if the effect is dilutive.
Such dilutive effect of the potential shares is included in the computation of diluted EPS until the
shareholders resolve the number of shares to be distributed to employees at their meeting in the
following year.
38. EQUITY TRANSACTIONS WITH NON-CONTROLLING INTERESTS
In March 2013, the Bank acquired an additional 0.176% equity interest in TCIFI and increasing its
continuing interest from 99.8% to 100%.
The additional investment was accounted for as equity transactions, since the Bank and subsidiaries did not
cease to have control over the subsidiary.
TCIFI
Cash consideration paid
The proportionate share of the carrying amount of the net assets of the subsidiary
transferred from non-controlling interests
$ 110
Differences arising from equity transaction
$ (108)
Line items adjusted for equity transaction
Capital surplus - difference between consideration given and carrying amount of the
net assets of the subsidiary
Non-controlling interest
$ 108
-
(218)
$ 108
254
39. OPERATING LEASE ARRANGEMENTS
The Bank and subsidiaries leased some offices, parking lots, and automobiles for officers and automated
teller machine locations under operating lease agreements covering periods from one to ten years. Under
the lease agreements, the Bank and subsidiaries shall pay rentals monthly, semi-annually or annually.
As of December 31, 2014 and 2013, refundable deposits paid under operating lease amounted to $391,218
thousand and $391,109 thousand, respectively.
The future lease payments of non-cancellable operating lease commitments are as follows:
December 31
2014
Not later than 1 year
Later than 1 year and not later than 5 years
Later than 5 years
$
393,088
859,081
26,754
$ 1,278,923
2013
$
384,173
778,791
29,295
$ 1,192,259
The lease contracts did not include terms for contingent rental payments and except for TCSC, there was no
sublease.
The lease payments recognized as operating expenses were as follows:
2014
2013
Minimum lease payment
Sublease payment received
$ 561,508
(52,695)
$ 561,437
(45,312)
$ 508,813
$ 516,125
40. CAPITAL MANAGEMENT AND POLICY
a. Descriptions and objective of capital management
The capital management objective of the Bank is to meet the Capital Adequacy Ratio (CAR) required
by law and to calculate eligible equity capital and required capital in accordance with the rules issued
by the competent authority.
In order to have sufficient capital and be able to undertake different kind of risk, the Bank evaluates
and analyzes the portfolios and characteristics of risks. The Bank intends to achieve the goal of
balanced risks and returns by using resources efficiently to yield maximum return to stockholders.
b. Management procedure
To manage the Bank’s capital adequacy, the Bank evaluates capital adequacy under the “Regulations
Governing the Capital Adequacy and Capital Category of Banks.” The Standardized Approach is used
in the management of credit risk-weighted assets, market risk-weighted assets and securitization assets,
and the Basic Indicator Approach is used in securitization of assets.
255
The risk management division of the Bank’s risk management group provides monthly reports about
capital adequacy. The report presents and analyzes the changes of capital adequacy ratios affected by
every kind of risk exposure and eligible equity capitals.
Furthermore, the risk management division uses various approaches and indexes regarding risk
measurement to evaluate the effects of the Banks’ risk-assets to capital and provides “Internal Capital
Adequacy Assessment Process” report (ICAAP Report) annually.
In addition to achieving the CAR required by the competent authority, the Board designated tolerable
degrees of every kind of risks so the Bank will have adequate capital against risks. The Bank’s risk
management group monitors the changes of CAR and risks through many kinds of risk indexes to
evaluate risks that the Bank can tolerate and reports to the Risk committee and the Board regularly.
c. CAR
The calculation of qualified eligible capital, risk-weighted assets and CAR are made in compliance with
regulations of competent authorities as of December 31, 2014 and 2013.
(In Thousands of New Taiwan Dollars, %)
Year December 31,
2014
Common stock equity
$ 27,044,967
The Other Tier 1 capital
3,969,364
Eligible capital
Tier 2 capital
9,331,210
Eligible capital
40,345,541
320,947,428
Appraise and adjust the risk in
4,341,366
Credit risk
credit
1,602,534
16,447,135
Risk-weighted
Operational
Standardized approach/Alternative
assets
risk
Advanced measurement approach
3,967,826
Market risk
Risk-weighted assets
347,246,289
11.62
Ratio of common equity to risk-weighted assets
7.79
Ratio of tier 1 capital to risk-weighted assets
8.93
Ratio of leverage
5.94
Item
December 31,
2013
$ 24,070,087
4,531,687
6,724,663
35,326,437
282,137,950
2,454,117
1,525,930
14,582,542
5,962,592
306,663,131
11.52
7.85
9.33
5.81
Note 1: Eligible capital, risk-weighted assets and risk exposure assessments are calculated under the
“Regulations Governing the Capital Adequacy and Capital Categories of Banks” and
“Explanation of Methods for Calculating the Eligible Capital and Risk-Weighted Assets of
Banks” revised by the Banking Bureau’s regulation dated January 9 and September 22, 2014
(Ref. No. 10200362920 and Ref. No. 10310004910, respectively).
Note 2: Formulas used were as follows:
1) Eligible capital = Common stock equity + The otherTier 1 capital + Tier 2 capital.
2) Risk-weighted assets = Risk-weighted asset for credit risk + Capital requirements for
operational risk and market risk x 12.5.
256
3) Capital adequacy ratio = Eligible capital ÷ Risk-weighted assets.
4) Ratio of common equity to risk assets = Common equity ÷ Risk-weighted assets.
5) Ratio of tier 1 capital to risk-weighted assets = (Common equity + other Tier 1 capital) ÷
Risk-weighted assets.
6) Ratio of leverage = Tier 1 capital ø Exposure measurement.
Note 3: Common equity to risk-weighted assets, Ratio of Tier 1 capital to risk-weighted assets and
Capital adequacy ratio are calculated under the “Regulations Governing the Capital Adequacy
and Capital Categories of Banks” No. 3 revised by the Banking Bureau’s regulation dated
November 26, 2012; the Bank and investee companies required to be included in the
consolidated financial statements under IAS 27 should calculate consolidated common stock
equity to risk-weighted assets, Ratio of Tier 1 capital to risk-weighted assets and CAR,
excluding items deducted from eligible capital.
41. FINANCIAL INSTRUMENTS
a. Fair value of financial instruments
Except for the accounts detailed in the following table, the management considers that the carrying
amounts of financial assets and financial liabilities recognized in the financial statements approximate
their fair values or that the fair values cannot be reasonably measured.
December 31
2014
Carrying
Amount
$ 23,414,551
2013
Fair Value
Carrying
Amount
Fair Value
$ 23,805,043
$ 15,542,432
$ 16,482,960
The valuation techniques and assumptions the Bank and subsidiaries use for determining fair values are
as follows:
The fair values of financial assets and financial liabilities traded on active markets are determined with
reference to quoted market prices. When market prices are not available, valuation techniques are
applied.
The financial data obtained by the Bank for making estimations and assumptions for financial
instrument valuation is consistent with those used by other market participants to price financial
instruments.
The Bank estimated the fair value of each spot and forward contract on the basis of the exchange rates
quoted by Reuters on each settlement date. Fair values of interest rate swap contracts and
cross-currency swap contracts are calculated using the discounted cash flow method. Fair values of
currency option contracts are based on estimates made using the Black-Scholes model. Fair values of
credit default swap contracts are valuated using the discount spread method.
If the quoted market price of a financial instrument is available in an active market, the quoted price is
the fair value. Fair values are determined as follows: (a) listed and over-the-counter (OTC) stocks closing prices at the balance sheet date; (b) bonds - period-end reference prices published by the GreTai
Securities Market or bond information system of Grand Cathay Securities Corp.; (c) overseas bonds -
257
period-end reference prices published by Bloomberg Quotation System.
The CVA is an adjustment to the valuation of OTC (Over The Counter) derivative contracts to reflect
within fair value the possibility that the counterparty may default and that the Bank may not receive the
full market value of the transactions.
The DVA is an adjustment to the valuation of OTC derivative contracts to reflect within fair value the
possibility that the Bank may default, and that the Bank may not pay full market value of the
transactions
The Bank calculates the CVA by applying the probability of default (PD) of the counterparty,
conditional on the non-default of the Bank, to the Bank’s expected positive exposure to the counterparty
and multiplying the result by the loss expected in the event of default. Conversely, the Bank calculates
the DVA by applying the PD of the Bank, conditional on the non-default of the counterparty, to the
expected positive exposure of the counterparty to the Bank and multiplying the result by the loss
expected in the event of default.
The Bank calculates the credit risk valuation adjustments by applying the PD resulting from the
professional ratings institutions and the Bank’s internal credit risk rating, a standard loss given
default(LGD) assumption of 60%,and exposure measurements default is evaluated by referring the
market value of OTC derivatives.
b. The following table provides an analysis of financial instruments that are measured subsequent to initial
recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is
observable:
1) The fair value hierarchies of the Bank and subsidiaries’ financial instruments were summarized as
follows:
Level 1 (Note 1)
December 31, 2014
Level 2 (Note 2)
Level 3 (Note 3)
$
$
Total
Non-derivative
financial instruments
Assets
Financial assets measured at
FVTPL - held for trading
Short-term bills
Bonds
Mutual funds
Future transaction deposits
AFS financial assets
NCD
Bonds
Treasury bills
6,396,343
586,263
653,628
18,954
18,925,524
1,394,513
-
996,564
-
52,079,776
27,649,348
163,266
$
8,651,752
$ 100,212,427
$
-
$
$
-
$
18,925,524
7,790,856
586,263
653,628
18,954
2,240,509
-
52,079,776
29,889,857
996,564
163,266
$
2,240,509
$ 111,104,688
$
-
Liabilities
Financial liabilities measured at
FVTPL
Designated at FVTPL
4,834,955
$
4,834,955
(Continued)
258
Level 1 (Note 1)
December 31, 2014
Level 2 (Note 2)
Level 3 (Note 3)
$
$
Total
Assets
Foreign currency swap
contracts
IRS contracts
Forward contracts
CCS contracts
CDS contracts
CVA
1,042
-
510
$
535,014
307,185
465,106
102,841
7,472
6,573
(34,911)
4,233,190
$
664,159
6,455
-
4,234,742
535,014
971,344
465,106
109,296
7,472
6,573
(34,911)
$
1,042
$
1,389,790
$
4,903,804
$
6,294,636
$
2,364
$
186,267
222,757
511
$
664,159
4,233,692
$
186,267
886,916
4,236,567
Liabilities
IRS contracts
Sell option contracts
contracts
Forward contracts
CCS contracts
CDS contracts
Adjustment and reset rights for
conversion price and
redemption rights embedded
in the ECB
DVA
Derivative financial
liabilities-hedging
-
651,056
249,147
1,361
4,097
-
651,056
249,147
1,361
4,097
-
1,220,933
(9,748)
-
1,220,933
(9,748)
$
2,364
4,179
$
2,530,560
$
4,897,851
4,179
$
7,430,775
(Concluded)
Level 1 (Note 1)
December 31, 2013
Level 2 (Note 2)
Level 3 (Note 3)
$
$
Total
Non-derivative
financial instruments
Assets
Short-term bills
Bonds
Mutual funds
Future transaction deposits
Financial assets designated as at
FVTPL
NCD
Bonds
4,950,766
760,310
574,018
6,200
16,945,228
3,172,770
-
$
-
$
16,945,228
8,123,536
760,310
574,018
6,200
-
-
145,958
145,958
-
66,401,494
24,599,750
2,107,139
66,401,494
26,706,889
(Continued)
259
Beneficial certificate
Level 1 (Note 1)
December 31, 2013
Level 2 (Note 2)
Level 3 (Note 3)
$
1,186,546
-
$
105,310
$
-
$
7,477,840
$ 111,224,552
$
2,253,097
$
-
$
4,847,634
$
-
$
4,847,634
$
1,957
$
510
$
587,764
$
590,231
Total
$
1,186,546
105,310
$ 120,955,489
Liabilities
FVTPL
Designated at FVTPL
Assets
Buy option contracts
contracts
IRS contracts
Forward contracts
CCS contracts
CDS contracts
-
54,377
529,360
36,796
104,198
5,641
10,057
224,380
15,792
-
54,377
753,740
36,796
119,990
5,641
10,057
$
1,957
$
740,939
$
827,936
$
1,570,832
$
2,205
2,119
$
265,905
422,872
509
47,041
25,251
8,524
-
$
133,298
224,380
583,876
-
$
399,203
647,252
586,590
47,041
25,251
8,524
2,119
Liabilities
IRS contracts
Forward contracts
CCS contracts
CDS contracts
Adjustment rights for
conversion price embedded
in the 2007 Debentures
Derivative financial
liabilities-hedging
$
-
304,500
-
304,500
-
5,449
-
5,449
4,324
$
1,080,051
$
941,554
$
2,025,929
(Concluded)
Note 1: Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities.
Active markets are markets with all of the following conditions: (i) the products traded in
the market are homogeneous, (ii) willing parties are available anytime in the market, and
(iii) price information is available to the public.
Note 2: Level 2 - inputs other than quoted prices included within Level 1 that are observable for
the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).
Note 3: Level 3 - fair value measurements using valuation techniques that include inputs for the
asset or liability that are not based on observable market data (unobservable inputs).
Under fair value measurement, there was no transfer from Level 1 to Level 2 for the years ended
260
2) Movements of financial assets classified into Level 3 of fair value were as follows:
Items
Financial assets measured
at FVTPL - held for
trading
Non-derivative
Derivative
Designated at FVTPL
AFS financial assets bonds
Beginning
Balance
NT$
Total Gains or Losses
In Profit or
Loss
In OCI
NT$
NT$
$
$
827,936
145,958
2,688,431
-
$
Increase in the Current Year
Transfer into
Purchase or
Level 3
Issue
NT$
NT$
-
$
1,387,437
-
$
-
Decrease in the Current Year
Sale,
Disposition or Transfer out
of Level 3
Settlement
NT$
NT$
$
-
(145,958))
(145,958
$
-
-
Ending
Balance
NT$
$
4,903,804
-
2,107,139
-
133,370
-
-
2,240,509
$ 3,081,033
$ 2,688,431
$
133,370
$ 1,387,437
$
-
$ (145,958)
(145,958 )
$
-
$ 7,144,313
$
$ 3,726,448
$
-
$
$
-
$
$
-
$ 4,897,851
measured at FVTPL
Held for trading Derivative
941,554
229,849
-
Items
Financial assets measured
at FVTPL - held for
trading
Non-derivative
Derivative
Designated at FVTPL
AFS financial assets bonds
Beginning
Balance
NT$
Total Gains or Losses
In Profit or
Loss
In OCI
NT$
NT$
$
$
381,277
713,751
-
8,979
(335,486)
(335,486 )
(2,519))
(2,519
$
Increase in the Current Year
Transfer into
Purchase or
Level 3
Issue
NT$
NT$
-
$
449,671
148,477
137,385
$
-
-
Decrease in the Current Year
Sale,
Disposition or Transfer out
of Level 3
Settlement
NT$
NT$
$ (390,256)
(390,256 )
-
$
-
Ending
Balance
NT$
$
827,936
145,958
2,155,935
(32,666
(32,666))
-
(153,515)
(153,515 )
-
2,107,139
$ 3,250,963
$ (361,692)
(361,692 )
$
137,385
$
598,148
$
-
$ (543,771)
(543,771 )
$
-
$ 3,081,033
$ 1,508,109
$ (775,655)
(775,655 )
$
-
$
209,100
$
-
$
$
-
$
measured at FVTPL
Held for trading Derivative
-
941,554
Valuation gains (losses) on assets recognized in profit or loss for the years ended December 31,
2014 and 2013 were gains of $2,985,907 thousand and losses of $45,605 thousand, respectively.
Valuation gains recognized in OCI for the years ended December 31, 2014 and 2013 were $133,370
Valuation gains (losses) on liabilities recognized in profit or loss for the year ended December 31,
2014 and 2013 were losses of $4,032,559 thousand and gains of $564,071 thousand, respectively.
3) Fair value measurement Level 3, and the sensitivity analysis
The fair value measurement of the Bank and subsidiaries’ financial instruments is deemed
reasonable; however, different valuation model or input could result in different valuation result.
Specifically, if the valuation input of equity securities classified in Level 3 moves upward or
downward by 1%, the effects on OCI would be as follows:
261
Change in Fair Value Recognized
in Current Profit or Loss
Favorable
Unfavorable
Movements
Movements
Assets
Financial assets at FVTPL
$
54
$ (54)
$ 111
$ (947)
Assets
Assuming the valuation input of financial instrument moves upward or downward by 1bp, the
effects on gain and loss for the period would be as follows:
Change in Fair Value
Recognized in OCI
Favorable
Unfavorable
Movements
Movements
Assets
$
54
$ (54)
$
99
$ (99)
Assets
Favorable and unfavorable movements refer to fluctuation of fair value calculated by using
valuation technique that employed non-observable inputs at different values.
The fair value of a financial instrument may be affected by one or more inputs, but the above table
only illustrates the effect of one single input, and the correlation and variance of input are not taken
into consideration.
42. FINANCIAL RISK MANAGEMENT
Ta Chong Bank
a. Overview
The Board approved risk strategy, established risk management policies and risk tolerance limits, thus
the Bank can effectively identify, assess and monitor the risks in the business, pursue rationalization of
risk and reward the
t soundness of risk management system and capital adequacy.
b. Risk management organizational framework
The Board is the ultimate approval authority of risk management, with ultimate responsibility for
overall risk management. In order to intensify risk management function, the Risk Management
Committee assesses and monitors identified risks, exposures to the risks, and compliance with risk
262
management procedures.
In order to implement the risk management procedures, the Risk Management Committee, the Assets
and Liabilities Committee, the Loan Review Committee, and the Business Continuity Planning
Committee consider and manage all risk-related issues. The Bank’s Risk Management Group, based
at the head office, coordinates with other functions based on the scope of management responsibilities.
The Bank’s Wholesale Banking Risk Management Group, Retail Banking Risk Management Group,
Debt Management Group and Risk Management Group implement the management of credit risks,
market risks, operational risks, liquidity risks and others, and monitor the suitable CAR to ensure that
operational risk is controlled within a tolerable range.
c. Credit risk
1) Sources and definition of credit risk
The Bank is exposed to credit risk in the event of default on contracts by counterparties. The
sources of credit risk are the accounts on the balance sheets and off the balance sheets, as follows:
a) Accounts on the balance sheet
The on-balance sheet exposure to credit risks is mainly in loans and the credit card business, due
from other banks, call loans to other banks, investment in debt instrument and derivatives.
b) Accounts off the balance sheet
The offoff-balance
f balance sheet exposure to credit risks is mainly in financial guarantees, acceptance,
letters of credit and loan commitments.
2) Credit risk management policies
a) Credit risk management objective
The Bank established appropriate risk management policies and processes to maximize profits
and shareholders’ value under tolerable risk level.
b) Credit risk management strategy
Under tolerable risks and target profits approved by the Board, the Bank has set up risk
management rules to regulate the selling of various business products and the managing of
asset portfolios.
c) Credit risk management policies
i.
To establish the optimization management of credit asset portfolio, promote credit
f
risk-based pricing, sufficient provision for
doubtful accounts, effectively reduce
centralization of credit- risk asset portfolios.
f lending, execute effective identification
ii. To implement independent review mechanism for
and measurement of risk before lending, and review and monitor periodically the asset
quality after lending.
iii. To upgrade
the quantitative
u
quantitative ability of credit risk management, for example, by improving
the accuracy of the corporate credit-rating and consumer banking score and, therefore
reduce risk.
263
iv. To strengthen dispersion principle of credit risk, evaluate exposure status of credit risk and
the changes of asset portfolio’s quality, and report to high-level management for adjusting
the Bank’s credit risk exposure in timely manner.
3) Credit risk management processes
In order to ensure that credit risk derived by all operations can be controlled at the tolerable risk
level, the Bank has the business manual that describes and analyzes existing or potential credit risks
including banking book, trading book, and all trading on statement of account and off statement of
account.
a) New products and business
The Bank would examine and confirm related existing or potential credit risk before sales or
promoting.
b) Complexity of lending business (such as leveraged buyout)
The Bank made regulations or rules to monitor and manage the business.
The Bank’s asset quality assessment and loss reserve provision ffor each business are all conducted
in accordance with relevant risk management approach. The credit risk management procedures and
measure of each major business are as follows:
a) Credit business (including loan commitments and guarantees)
The classification of credit assets and the level of credit quality are as follows:
i.
The classification of credit assets
The Bank’s credit assets are divided into five categories, in addition to normal credit assets
classified as the Category 1, the other bad credit assets categorized after assessment based
on the guarantees of debt and the age of overdue accounts are classified as Category 2
special mention, Category 3 substandard, Category 4 collectability highly doubtful, and
Category 5 uncollectible.
In order to manage unsound credit, the Bank set up “Rules for collection and management
of bad credit assets”, “Rules
R
of authorization for credit assets management and Rules to
evaluate assets and deal with non-performing/non-accrual loans” as the basis to manage
credit program and debt collection.
ii. The level of credit quality
The Bank measures credit risk through consolidating business characteristics, size, objects,
complexity and other risk factors and applies different risk-management methods to classify
credit ratings and credit quality.
i) Wholesale Banking
The Bank uses “The Credit Rating Measures of Corporate Debtors” as the rule for
internal credit rating, which scales the degree of risk from Tier 1 (lowest risk) to Tier 8
(highest risk); the rating is adjusted according to expert opinion made after examination
of each debtor and the changes in each debtor’s risk.
264
ii) Retail Banking
The microfinance and credit card products of consumer banking are evaluated for risk
exposure by using scorecard; the amount of availed loan is assessed according to each
rating range and expected loss rate. In addition, the exactness and effectiveness of rating
is ensured by risk management department’s quarterly independent monitoring and
verification
f
. Cash card product’s level of credit risk is classified according to the amount
verification.
of availed loan.
Risk of consumer financial mortgage products is focused on collaterals located in
densely populated large metropolitan areas and public facilities where housing prices are
relatively stable and future development and disposal would be easier. To manage the
credit risk, different credit ratings are formulated based on the aforementioned situation
to distinguish collaterals’ location, area, usage, valuation, and customer repayment
ability. On the part of borrower, solvency is more important; customers who are
generally non-wage earners are evaluated for credit capacity under relatively more
stringent conditions.
b) Call loans to other banks
For interbank credit scheme, credit quota is approved based on the credit risk level of financial
institution as listed on the credit rating information provided by eligible credit rating agency
abroad and after considering the net scale of risk tolerance of the financial institution and the
Bank. For major contact financial institution, if the credit quota exceeds limit, credit review and
approval of reciprocal credit program by higher management is required.
c) Debt instruments and derivative financial instruments
i.
Debt instruments
For interbank credit scheme, credit quota is approved based on the credit risk level of
financial institution as listed on the credit rating information provided by eligible credit
rating agency abroad and after considering the net scale of risk tolerance of the financial
institution and the Bank. For financial institutions that the Bank frequently has business
with, if the credit quota exceeds limit, credit review and approval of reciprocal credit
program by higher management is required. For non-financial institutions, credit risk
management practices defined by various investment policies are applied. The issuer or
guarantor that conforms to the lowest required level of the qualified external credit rating
agency recognized by the Bank can apply for credit quota after agreement by credit risk
management units. The issuer or guarantor without reciprocal credit program should be
reviewed and required to have reciprocal credit program.
ii. Derivative financial instruments
Under the Bank’s interbank credit scheme, the counterparty financial institutions should first
obtain approved credit quota before delivery; credit quota is based on the credit risk level of
the financial institution as listed on information provided by eligible credit rating agency
abroad and after considering the net scale risk tolerance of the financial institution and the
Bank. Credit reduction program is established according to credit risk management
guidelines to manage risk involving financial instruments of counterparties. The market
value of margin or eligible collateral should be more than the loss threshold amount of
credit risk. In order to reduce pre-settlement risk and settlement risk, the Bank should sign
contract of net settlement to strengthen credit risk management. For major contact financial
institutions, if the credit quota of derivative financial instruments exceeds the limit, credit
review and approval of reciprocal credit program is required. For counterparty non-financial
institutions, credit review and approval of reciprocal credit program is required;
265
pre-settlement risk quota and market value loss limit must be determined according to credit
risk management guidelines to manage risk involving financial instruments of counterparties
and control potential exposure and loss on trading.
4) Credit risk hedging and mitigation policies
a) Collateral
To reduce credit risk arising from ineffective credit control and counterparty default,
appropriate margin or collateral that will effectively offset the credit risk is required.
The Bank evaluates guarantee types, number of loans, valuation methods and reassesses
frequency and coverage of guarantees as part of management measures to ensure that collaterals
mitigate risk. The Bank can also cooperate with another creditor for preservation of collateral,
offset of account if clearly defined credit event occurs, to reduce amount, or to shorten the loan
repayment period to reduce credit risk.
b) Credit risk limit and credit risk concentration and control
To avoid the concentration of credit risks, the Bank has included credit limits for a single
person, counterparty and group in its credit-related guidelines in the guidelines for investment
and regulations for risk control on equity investments. To manage the concentration risk on the
assets, the Bank has set credit limits by country, industry, conglomerate, transactions
collateralized by stocks, and other categories and integrated within one system the supervision
of concentration of credit risk in these categories. Besides, the Bank regularly monitors the
situation and several credit risk exposure positions of concentration.
i.
Credit limits by a single person, counterparty and group
To strengthen credit risk management and avoid the concentration of credit risks, the Bank
has set up “Guidelines for managing the concentration of credit risks by a single person,
counterparty and group”, which establish portfolio management ceiling and early warning
mechanisms for those loans collateralized by a single person, counterparty and group as the
main source of repayment and make ceiling management for individual counterparty.
ii. Credit limits by country
To diversify credit risks by countries, the Bank has set up the regulation of “Guidelines of
fforeign country risk limit management”
management”.. The Bank gives its rating to individual country’s
foreign currency long term credit according to qualified external rating agencies (such as the
S & P’s, Moody’s, and Fitch) and other rating agencies, and gross national product (GDP)
of the countries annually. Then the Bank allocates credit limits by individual country in
lending, investments in derivative instruments, call loans to banks and investments in debt
financial instruments.
iii Credit limits by industry
To strengthen credit risk management and avoid the concentration of credit risks, the Bank
has set up “Guidelines for managing the concentration of credit risks by industry”. The
Bank’s policy is to set up different credit quota by various industries in lending, investments
in derivative instruments, call loans to banks and investments in debt financial instruments,
based on the existing industrial concentration cases, CAR and the Bank’s capacity.
iv Credit limits by conglomerate
For the effective management of the Bank’s credit risk concentration by conglomerate,
266
“Public Bank Group’s corporate credit risk limit control guidelines” requires the
establishment of an internal group corporate credit rating and credit rating in accordance
with the Bank’s policies, set up of different credit risk quota management, and the
implementation of corporate credit risk group classification management system.
v. Credit limits by transactions collateralized by stocks
For the dispersion of credit portfolio and liquidity and volatility of stock market price, the
Bank has set up “public commercial bank loans secured by stocks quota management
policies” and “public commercial bank loans secured by stocks warning measures” which
establish portfolio management ceiling and early warning mechanisms for those loans
collateralized by stock as the main source of repayment and make ceiling management for
individual stock.
c) Mitigation of financial transaction pre-settlement risk
Right before delivery of financial instruments, margin deposits, netting agreements or early
termination of the contract are agreed to reduce the amount of the Bank's exposure.
d) External assurance
For credit with inadequate collateral, avail of the government-approved “SME Credit Guarantee
Fund” to increase security and risk mitigation.
e) Manage to avoid or reduce credit risk effectively
In order to ensure and monitor the effectiveness of credit risk hedging, management
mechanisms, such as the “Corporate Finance Account Management Regulations” are applied.
Regular review of the borrower’s credit status, financial, operational and security condition, and
changes in products or transactions is done by a dedicated audit department to monitor changes
in the credit risk, adjust exposure positions, if necessary, transfer credit risk, or to levy collateral
or external credit guarantees to ensure effective credit risk avoidance.
5) The maximum exposure to credit risk of the Bank
Except for the maximum credit exposure on the unexpired selling of CDS contracts referred to in
Note 8 without taking collateral or other credit enhancement or risk mitigation effect into
account, the maximum exposure to credit risk of offf balance sheet items without consideration
off-balance
of guarantees or other credit enforcement
f
instrument is stated as follows:
Items
Issued and irrevocable loan commitments
Irrevocable credit card commitments
Letter of credit issued yet unused
Other guarantee
Maximum Credit
Exposure of Credit Risk
December 31
2014
2013
$ 15,262,899
53,902,805
941,120
14,629,002
$ 11,296,492
50,320,278
1,850,189
16,893,477
$ 84,735,826
$ 80,360,436
6) Concentration of credit risk
Significant concentrations of credit risk exist when there are significant exposures to an
individual counterparty to a transaction or a number of related counterparties engage in similar
267
activities and have similar economic characteristics that would cause their ability to meet
contractual obligations to be similarly affected by changes in economic or other conditions. The
credit risk concentration of the Bank originates from assets, liabilities or offf balance sheet items
off-balance
that are generated by the transaction (irrespective of the product or service), performance,
execution or cross-category exposure combination, including credit extension, deposits and call
loans to banks, securities investment, receivables and derivatives instruments. There is no
significant concentration of credit risk within the Bank in terms of a single client or
counterparty to a transaction, and the transaction amount of a single client or counterparty does
not account for a significant amount of the Bank’s balance of discounts and loans and
non-accrual account. The following table illustrates the diversification of the loan portfolio
among object, geographical regions and industry sectors.
a) By objects
Amount
%
December 31, 2014
Private business
Natural person
Non-profit
f Organization
$ 162,291,583
154,446,677
119,713
51.22
48.74
0.04
$ 316,857,973
100.00
$ 148,192,974
147,572,079
118,364
50.08
49.88
0.04
$ 295,883,417
100.00
December 31, 2013
Private business
Natural person
Non-profit Organization
b) By region
Amount
%
December 31, 2014
Domestic
Asia
America
Europe
Others
$ 254,280,500
34,248,159
17,629,232
379,456
10,320,626
80.25
10.81
5.56
0.12
3.26
$ 316,857,973
100.00
$ 243,244,611
28,034,308
17,778,165
1,035,396
5,790,937
82.21
9.47
6.01
0.35
1.96
$ 295,883,417
100.00
December 31, 2013
Domestic
Asia
America
Europe
Others
268
c) By industry
Amount
%
December 31, 2014
Personal
Manufacturing
Finance, insurance and real estate
Wholesaling, retailing, food and beverage
Others
$ 154,290,309
69,802,402
42,880,075
20,430,428
29,454,759
48.69
22.03
13.53
6.45
9.30
$ 316,857,973
100.00
$ 147,415,710
75,274,919
36,430,989
16,295,328
20,466,471
49.82
25.44
12.31
5.51
6.92
$ 295,883,417
100.00
December 31, 2013
Personal
Manufacturing
Finance, insurance and real estate
Wholesaling, retailing, food and beverage
Others
7) Analysis of credit quality and impairment of overdue financial assets held by the Bank
Credit risk rating is categorized into Excellent, Good and Acceptable and the definitions are stated
below:
Excellent: They have strong debt-performance ability and there is a rare probability of default or
expected loss.
Good: They have great debt-performance ability, but they may weaken in unfavorable economic
conditions or environmental changes.
Acceptable (Residential mortgage loan): Compared to other debtors, they need to improve their
debt performance ability, but the values of the collaterals as the second-repayment sources are
sufficient.
Acceptable / other (excluding Residential mortgage loan): Their debt-performance ability is
weaker than other debtors, especially in unfavorable economic conditions or environmental
changes.
Credit quality analysis of Discount, loans and receivables , please refer to Table 7.
Credit quality analysis of Securities investment , please refer to Table 8.
8) Aging analysis of overdue financial assets with no impairment of the Bank.
The delayed processing of the borrower and other administrative reasons may give rise to an
overdue financial asset with no impairment. According to the internal risk management policy of
the Bank and subsidiaries, financial assets overdue for less than 90 days are usually not deemed
impaired unless other evidence indicates otherwise.
269
The aging analysis of the financial assets that are past due but not impaired is as follows:
December 31, 2014
Item
Receivables
Corporate Banking
Personal Credit Loans
Credit Card
Residential Mortgage Loans
Cash Card
Discounts and Loans
Finance Consumer Loans
Cash Card
Finance Corporate Loans
Secured
Unsecured
Overdue for
Less than 1
Month
$
779
2,245
117,706
2,664
445
Overdue for 1-3
Months
$
2,846
24,213
1,348
227
Total
$
779
5,091
141,919
4,012
672
911,530
14,494
127,365
257,409
3,872
84,062
1,168,939
18,366
211,427
4,258
484,363
-
4,258
484,363
December 31, 2013
Item
Receivables
Credit Card
Cash Card
Discounts and Loans
Finance Consumer Loans
Cash Card
Finance Corporate Loans
Secured
Unsecured
Overdue for
Less than 1
Month
$
3,119
98,763
2,928
565
Overdue for 1-3
Months
$
4,407
32,658
2,025
360
Total
$
7,526
131,421
4,953
925
967,283
17,361
179,625
357,079
6,006
128,495
1,324,362
23,367
308,120
76,193
-
76,193
9) Collateral assumed management policy
The collaterals assumed included land, buildings and securities, with both the carrying amounts of
$13,647 thousand as of December 31, 2014 and 2013.
Amounts due from borrowers were offset when the collateral was assumed by the Bank.
Collaterals assumed are classified in the consolidated balance sheet as other assets.
10) Asset quality of nonperforming loans and receivables (refer to Table 3).
270
11) Concentration of credit extensions
December 31, 2014
Ranking
(Note 1)
1
2
3
4
5
6
7
8
9
10
Companies or Group Enterprises
Categorized by Industries (Note 2)
Group A Unclassified Other Financial
Intermediation
Group B Unclassified Other Electronic
parts manufacturing
Group C Unclassified Other Financial
Intermediation
Group D Locomotive Manufacturing
Group E Liquid Crystal Panel and
Components Manufacturing
Group F Unclassified Other Specialized
in Whole Sales
Group G Petroleum and Chemical
Material Manufacturing
Group H Data Storage Media
Manufacturing
Group I Real Estate Development
Industry
Group J Engineering Service and
technical consulting
Amount of Credit
Extensions (Note 3)
$ 4,090,320
Percentage of the
Bank’s Equity
(%)
12.55
3,462,252
10.62
3,021,792
9.27
2,456,839
2,240,242
7.54
6.87
2,080,764
6.38
1,930,050
5.92
1,512,112
4.64
1,468,000
4.50
949,650
2.91
December 31, 2013
Ranking
(Note 1)
1
2
3
4
5
6
7
8
9
10
Companies or Group Enterprises
Categorized by Industries (Note 2)
Group L Liquid Crystal Panel and
Group C Unclassified Other Financial
Intermediation
Group A Unclassified Other Financial
Intermediation
Group E Liquid Crystal Panel and
Group D Locomotive Manufacturing
Group K Manufacture of Computers
Group F Unclassified Other Specialized
in Whole Sales
Group H Data Storage Media
Manufacturing
Group N Real Estate Development
Industry
Group M Integrated Circuits
Manufacturing
Amount of Credit
Extensions (Note 3)
$ 3,509,843
Percentage of the
Bank’s Equity
(%)
11.89
3,422,612
11.59
3,399,500
11.52
2,586,633
8.76
2,456,973
2,449,972
2,087,523
8.32
8.30
7.07
1,472,400
4.99
1,461,863
4.95
1,119,048
3.79
Note 1: Ranking of top 10 borrowers is according to the amount of credit balances. Government
and state-owned enterprises have been excluded. If the borrowers belong to group
271
enterprises, the credit amounts of the group enterprises are grouped and added together,
and disclosed by “code” and “industrial classification”. Group enterprises disclose the
indusial classification of the maximum credit exposure. Also, industrial classification
should follow the standard industrial classification announced by General Budget,
Accounting and Statistics and classified to detail classes.
Note 2: “Group Enterprise” conforms to the definition
f
of article 6 in “Supplementary Provisions to
the Taiwan Stock Exchange Corporation Rules for Review of Securities Listings”.
Note 3: The total credit balance includes each item of loans (such as outward & inward
documentary bills and discounts, overdrafts, unsecured short-term loans, secured
short-term loans, accounts receivable - financing, unsecured medium-term loans, secured
medium-term loans, unsecured long-term loans, secured long-term loans and NPL.),
factoring, acceptance notes receivable and guarantees.
d. Market Risk
1) Source and definition of risk
Market risk refers to the risk of fluctuation in the fair values or the future cash flows of the on- and
offf balance sheet instruments held by the Bank because of market price changes. The risk factors
off-balance
which cause market price changes usually include interest rates, exchange rates, and the prices of
equity securities and commodities.
The main market risks the Bank faces are the risks on interest rates and exchange rate risks. The
instruments exposed to interest rate risk mainly include bond derivatives and interest rate
derivatives such as the interest rate swap; and the instruments exposed to exchange rate risk mainly
include the consolidated positions of the investment held by the Bank, such as the spot denominated
in foreign currency and foreign exchange options.
2) Risk management policy
The basic principles of market risk management are based on the risk management policies
approved by the Board.
The Bank’s risk management units developed different business and risk management rules based
on risk management policies to regulate financial instruments transactions, the setting up of risk
limits and stress test.
The Bank’s positions monitored by the Risk Management Group for exposure to market risks are
divided into investment portfolios held for trading (“the Trading Book”) and investment portfolios
not held for trading (“the Banking Book”).
3) Risk management process
a) Identifying and measuring
The Bank’s risk management units identify market factors for the Bank’s new financial
instruments and exposed positions to evaluate the effect to profits or losses. Under the
regulations, risk management units calculate daily the Trading Book’s exposure positions of
various parts of the price sensitivity and the profits or loss, and shall calculate the possible loss
on a quarterly basis, so that the Bank could avoid making huge losses under extremely bad
situations. Holding portion under extreme market pressure losses endangers the company to
suffer operating losses.
272
b) Monitoring and reporting
The Bank’s risk management units set limits of the Trading Book such as position limits, stop
loss limits, etc., and implement the limitations after approval by the Board.
Risk management units calculate daily trading book exposure positions, sensitivity and the
profit and loss of each position, and the impact of risk factors on its holding positions and profit
or loss and make sure not go beyond the limits approved by the Board. The Bank also has
specific notification procedures; if profits or losses exceed the limits authorized by the Board,
risk management units will report to authorized executive officers.
The Risk Management Group reports regularly to the Risk Committee of the Board about the
achievement of management objectives on market risks, the control of holding positions and
profit or loss, the stress test, etc. for their understanding of the Bank’s market risk control.
4) Trading book’s risk management policies
Trading Book means financial instruments held for trading purposes or hedging. It refers to the
financial positions held for trading purposes, the intention of short-term held for sale financial
instruments, or the actual or expected short-term price fluctuations to gain profit or locked arbitrage
selff position, brokerage business of brokered transactions or arising from
profits, such as self-position,
transactions due to market position.
The Trading Book market risk management principles are as followsǺ
a) Management strategy
The objective of trading book market risk management is to maximize the efficiency of capital
used, that is, limited capital to pursue maximum profits. To effectively control the market risk,
credit risk management units set various risk limits to control exposure positions and loss limit
in accordance with trading strategies, types of transaction goods, target annual profit for each
portfolio and other conditions.
b) Policies and procedures
The Bank refers to its “Market Risk Management Manual” in managing trading book.
c) Evaluation policy
If publicly observable market prices are available in the financial commodity markets, the risk
management unit assesses the profit or loss at market prices. If market price is not obtainable,
valuation model is used; the results are carefully evaluated using mathematical models; and the
assumptions and the parameters of the valuation model are regularly reviewed.
d) Risk measurement methods
i
The sensitivity of each risk factor is measured as the impact of one basis point change in
interest rates on the profit and loss of interest rate risk positions; Greeks also measure the
effect of price change of risk factors on the value of option position.
ii Risk management unit calculates the maximum potential loss of position held in pressure
situations.
273
5) Trading book interest rate risk management
a) Interest rate risk
“Interest Rate Risk” means the result of change in interest rates, caused by changes in the fair
value of the Bank’s risk position. Major commodities include interest rate related securities and
interest rate derivatives.
b) Trading book interest rate risk management Program
Risk management units set the trading book portfolios authorized for the trading of commodities,
set limit of DV01 and stop-loss limit approved by the Board, and monitor exposure limits daily.
c) Risk measurement methods
i.
Measure interest rate risk by DV01, which means when interest rates raise 1 basis point, the
value of the interest rate risk positions held changes.
ii. Plus or minus 100 basis points (bp) on a quarterly basis is used to measure the portfolio
subject to extreme changes in interest rates.
6) Banking book interest rate risk management
Banking book interest rate risk is managed principally to improve fund use efficiency, or avoid loss
of economic value of net interest income or adverse changes in interest rates. Banking book interest
rate risk sources include liquidity risk of bonds held, bills cash position and its hedge position, and
the order of business units for trading, such as deposits, loans, etc.
a) Strategy
Interest rate risk management objective is liquidity, stability and growth in earnings.
b) Measuring
Banking book interest rate risk primarily measures banking book assets, liabilities and
off-balance
offf balance sheet items amount and maturity or repricing date difference. Interest rate risk
management unit monitors the banking book interest rate risk by interest rate sensitivity.
c) Process
The risk management unit should identify repricing risk, interest rate changes and to measure
the economic value of the Bank that may be affected. Risk management unit monitors the
interest rate risk position and prepares monthly analysis; in addition to reporting asset and
liability to management committee, it regularly reports to the Risk Management Committee and
the Board.
274
Interest rate sensitivity information
Interest Rate Sensitivity (New Taiwan Dollars)
December 31, 2014
Items
1 to 90 Days
(Included)
$ 291,598,288
99,763,798
191,834,490
91 to 180 Days 181 Days to One
(Included)
Year (Included)
$
6,848,441
$
4,454,605
134,697,339
58,456,681
(127,848,898)
(127,848,898)
(54,002,076)
(54,002,076)
1 to 90 Days
(Included)
$ 286,731,003
88,235,422
198,495,581
(Included)
Year (Included)
$
6,815,348
$
4,112,574
122,506,578
84,822,827
(115,691,230)
(115,691,230)
(80,710,253)
(80,710,253)
Interest rate-sensitive assets
Interest rate-sensitive liabilities
Interest rate-sensitive gap
Net worth
Ratio of interest rate-sensitive assets to liabilities
Ratio of interest rate-sensitive gap to net worth
Over One Year
$
36,037,562
22,207,690
13,829,872
Total
$ 338,938,896
315,125,508
23,813,388
31,576,455
107.56%
75.42%
December 31, 2013
Items
Net worth
Over One Year
$
33,923,527
16,746,833
17,176,694
Total
$ 331,582,452
312,311,660
19,270,792
28,717,664
106.17%
67.10%
Note 1: The above amounts include only New Taiwan dollars, excludes contingent assets and
contingent liabilities.
Note 2: Interest rate-sensitive assets and liabilities represent the revenues or costs of
interest-earning assets and interest-bearing liabilities affected by interest-rate
fluctuations.
Note 3: Ratio of interest rate-sensitive assets to liabilities = Interest rate-sensitive assets ÷
Interest rate-sensitive liabilities (in New Taiwan dollars).
Note 4: Interest rate-sensitive gap = Interest rate-sensitive assets ɡ Interest rate-sensitive
liabilities.
Interest Rate Sensitivity (USD)
(In Thousands of U.S. Dollars, %)
December 31, 2014
Items
1 to 90 Days
(Included)
$
1,798,826
1,409,387
389,439
Net worth
(Included)
Year (Included)
$
53,481
$
7,103
125,150
574,592
(71,669)
(71,669)
(567,489)
(567,489)
Over One Year
$
203,932
362,868
(158,936)
(158,936)
Total
$
2,063,342
2,471,997
(408,655)
(408,655)
35,090
83.47%
(1,164.59%
(1,164.59%))
275
December 31, 2013
1 to 90 Days
Items
(Included)
$
1,570,570
1,387,768
182,802
Net worth
(Included)
Year (Included)
$
52,264
$
5,259
201,816
895,244
(149,552)
(149,552)
(889,985)
(889,985)
Over One Year
$
221,287
10,325
210,962
Total
$
1,849,380
2,495,153
(645,773)
(645,773)
26,113
74.12%
(2,472.99%)
(2,472.99%)
Note 1: The above amounts include only USD amounts held by the onshore branches, OBU
and offshore branches of the Bank, excludes contingent assets and contingent
liabilities.
Note 2: Interest rate-sensitive assets and liabilities represent the revenues or costs of
interest-earnings assets and interest-bearing liabilities affected by interest-rate
fluctuations.
Note 3: Ratio of interest rate-sensitive assets to liabilities = Interest rate-sensitive assets ÷
Interest rate-sensitive liabilities (in U.S. dollars).
Note 4: Interest rate-sensitive gap = Interest rate-sensitive assets ɡ Interest rate-sensitive
liabilities.
The carrying amounts of financial assets and liabilities in rate-risk exposure at balance sheet
date were as follows:
December 31
Rate-risk at fair value
Financial assets
Rate-risk at cash flows
Financial assets
2014
2013
$ 188,438,161
233,377,352
$ 190,205,935
212,940,386
211,657,064
153,197,163
193,433,507
160,452,013
7) Foreign exchange risk management
a) Definition of foreign exchange risk
Gain or loss caused by exchange of two foreign currencies in different times. The primary
exchange rate risk of the Bank comes from spot rate, forward rate, foreign exchange option and
other derivative financial instruments.
b) Measurement method
Delta is used to measure exchange rate risk of First-order change; Gamma is used to measure
exchange rate risk of Second-order change; and Vega is used to measure exchange rate risk of
Third-order change.
c) Foreign Exchange risk management procedure
The risk management unit has set limit amounts and loss control limit for transaction position of
spot foreign currency and foreign currencies of forward options to control exchange rate risk, as
276
authorized by the Board; controlling of exposure limit amounts is done on a daily basis.
8) Equity securities price risk management
a) Definition of equity securities price risk
Equity securities price risk is the price volatility of equity securities that affect the value of
holding position. The main equity securities risk comes from listed stocks.
b) Measurement method
The risk management unit measures exposure of spot position by market price.
c) Equity securities price risk management procedure
To control equity securities risk, the risk management unit has set limit amounts and loss
control limit of equity securities, as authorized by the Board; controlling of exposure limit
amounts is done on a daily basis.
9) Market risk measurement method
a) Stress test
Stress test is the measure of the risk assets portfolios in the worst condition of maximum
potential loss. The risk management unit uses stress test to calculate stress loss quarterly.
b) Sensitivity analysis
The sensitivity analysis means change of risk factors effect on the profit and loss in the holding
position. Risk management units calculate daily exposure position of price sensitivity.
i
Interest rate risk
The Bank assumed all other variables were held constant and the global yield curve of
market was one basis point higher/lower. As a result, the Bank’s pre-tax profits for the
years ended December 31, 2014 and 2013, would increase (decrease) $302 thousand and
$1,812 thousand, respectively. The OCI would increase (decrease) $7,593 thousand and
$6,991 thousand.
ii Foreign exchange risk
The Bank’s main foreign currency is US dollar (USD). The Bank assumed that if the
variance factor is unchanged, USD / NTD goes up 1%, the income before income tax
increases $1,623 thousand and $4,915 thousandǹIf USD / NTD go down 1%, the income
before income tax decreases $1,654 thousand and $4,876 thousand for the years ended
iii Equity securities price risk
The Bank assumed all other variables were held constant. If equity securities price had
been 1% higher/lower, pre-tax profit for the years ended December 31, 2014 and 2013
would have increased (decreased) $881 thousand ($1,578 thousand) and $58 thousand ($978
thousand). The OCI also increased (decreased) $8,604 thousand and $9,474 thousand.
277
iv Concentration risk of foreign exchange
The Bank held foreign-currency assets and liabilities. The assets and liabilities and the
foreign currency amounts As of December 31, 2014 and 2013 were as followsǺ
USD
December 31, 2014
EUR
CNY
ZAR
JPY
Total
Foreign currency financial assets
Cash and cash equivalent
Due from
f
the Central Bank and call loans to other banks
AFS financial assets, net
Discounts and loans, net
Receivables, net
Refundable deposits
Other assets - miscellaneous
$
848,433
1,418,144
7,310,204
6,172,667
52,094,036
7,605,182
3,806,914
1,369,312
$
6,651
570,258
219,983
-
$
90,015
19,542
793,408
462,515
-
Total
$ 80,624,892
$
796,892
$ 1,365,480
Financial liabilities at FVTPL
ECB
Payables
$ 7,930,995
56,037,270
5,737,891
3,260,557
9,924,551
1,571,400
1,552,074
$
6,206
915,682
444,982
4,463,947
2,930
$
Total
$ 86,014,738
$ 5,833,747
$
$
182,810
2,593
1,457,105
1,797,348
10,897,916
-
$
75,760
99,698
2,274,071
98,329
-
$ 1,203,669
1,418,144
8,002,295
6,392,650
56,618,620
9,963,374
3,806,914
10,897,916
1,369,312
$ 14,337,772
$ 2,547,858
$ 99,672,894
24,888
710,735
24,106
89,298
264
$
1,558
6,172,636
24,301
235,313
27,604
$
10,093
685,386
8,436
13,133
10,073
$ 7,973,740
64,521,709
6,239,716
3,260,557
9,924,551
6,373,091
1,592,945
849,291
$ 6,461,412
$
727,121
$ 99,886,309
Foreign currency financial liabilities
NoteǺ December 31, 2014 exchange rate against New Taiwan dollarsǺ USD exchange
rate: 31.66; ZAR exchange rate: 2.73; EUR exchange rate: 38.48; CNY exchange
rate: 5.10; JPY exchange rate: 0.26.
USD
December 31, 2013
ZAR
CNY
AUD
JPY
Total
Foreign currency financial assets
Cash and cash equivalent
AFS financial assets, net
Discounts and loans, net
Receivables, net
Refundable deposits
$ 2,027,028
837,900
3,886,328
5,947,492
45,468,230
9,474,884
$
20,430
11,318
1,484,963
221,438
13,044
Total
$
32,617
208,824
79
$ 67,843,622
$
1,751,193
$
241,520
$
Financial liabilities at FVTPL
Payables
$ 8,533,155
62,792,805
695,867
3,450,615
234,503
$
4,626
1,837,349
16,212
1,365,573
301,600
$
5,044
861,757
185,052
1,733,191
Total
$ 78,713,907
$
3,533,033
$
2,786,722
201,760
-
$ 7,032,410
6,114
234,273
86,629
$
50,929
9,892
1,864,405
260,799
-
201,760
7,359,426
$
2,186,025
$ 79,381,786
$
2,509,471
3,893
154,505
$
44,418
824,375
3,847
52,292
$ 8,587,243
68,825,757
904,871
4,816,188
2,476,091
260,211
3,282,235
$
2,673,580
$
1,185,143
$ 88,892,385
-
-
$ 9,163,414
837,900
4,122,476
7,432,455
47,788,346
9,835,435
Foreign currency financial liabilities
3,006,962
7,673
1,678
5,711
NoteǺ December 31, 2013 exchange rate against New Taiwan dollarsǺ USD exchange
rate: 29.93; AUD exchange rate: 26.69; ZAR exchange rate: 2.86; CNY exchange
rate: 4.94; JPY exchange rate: 0.28.
e. Liquidity Risk
1) The sources and definitions of liquidity risk
Liquidity risk is the possible inability to liquidate assets or obtain financing to fund its maturing
obligations that may result in losses. Liquidity risk may be caused by low-depth market, market
disruptions, and changes in circumstances where the Bank is unable to realize assets or raise
sufficient funds.
278
2) Liquidity risk management policy
a) Liquidity risk management process should be able to adequately identify, effectively measure,
continuously monitor, and properly control the Bank’s liquidity risk to ensure the Bank, in
normal operating environments or under pressure, has adequate funding, increase in assets or
payment is made for liabilities when due.
b) The Bank should manage to have adequate liquid assets to enable the Bank mitigate liquidity
risk.
c) Capital management should regularly review the asset and liability structure, proper
configuration of assets and liabilities, and should take into account the realization of assets and
the stability of financing sources to plan combinations of funding sources to ensure that the
Bank is liquid.
d) The measurement system/models for managing liquidity risk should cover all important factors
affecting the Bank’s liquidity (including the introduction of new products or services, to assist
the Bank to evaluate and monitor the pressure and liquidity risk.
e) The Bank should establish an appropriate information system to measure, monitor and report
liquidity risk.
The Bank should have early warning tools like liquidity risk limits and continuously monitor
and report liquidity risk profile. The liquidity risk limits should consider business strategy,
operational characteristics and risk preferences and others.
f In addition to monitoring business in the normal conditions, the Bank should regularly conduct
f)
stress tests and evaluate the assumptions of the liquidity position, and ensure the Bank has
sufficient liquidity to withstand stressful situations. The Bank should be alert to liquidity risk
indicators and limits of reasonableness.
g) Develop appropriate action plans in response to possible happening of a liquidity crisis, and
review the plans regularly to ensure that the action plans are in line with the banking operating
environment and conditions, and can continue to play its role effectively.
h) Maturity analysis of non-derivative financial liabilities
The table below shows the contractual maturity date of the Bank’s non-derivative financial
liabilities. The amounts disclosed in the table are based on various currencies and will not be the
same with the amounts in the consolidated balance sheets.
Maturity Analysis of Non-derivative Financial Liabilities (New Taiwan Dollar)
December 31, 2014
Non-derivative financial liabilities at
FVTPL
Securities sold under agreements to
repurchase
Payables
Other items of cash outflow on maturity
Remaining Period to Maturity
91-180 days 181 days-1 year
1,232,744
6,149,324
0-30 days
1,508,192
31-90 days
718,672
5,799
-
-
10,478,771
138,981
44,079,323
8,510,909
1,503,324
147,577
52,431,078
1,208,091
66,740
51,046,750
8,629
Over 1 year
-
Total
9,608,932
-
-
5,799
252,157
65,798,443
193
9,735
63,637,512
18,324,955
1,898,086
11,982,095
615,190
276,993,106
18,324,955
11,625,908
279
December 31, 2013
FVTPL
repurchase
Payables
0-30 days
1,500,000
31-90 days
1,600,000
210,536
8,207,612
Over 1 year
-
Total
11,518,418
19,396
-
-
-
-
19,396
10,102,499
132,763
38,436,734
6,824,999
842,420
96,254
46,307,744
314,895
76,329
43,928,282
3,523
283,413
82,528,936
7,052,432
8,678
12,313
60,703,285
13,337,634
1,882,366
10,944,919
601,072
271,904,981
20,390,066
9,034,461
Maturity Analysis of Non-derivative Financial Liabilities (USD)
(In Thousands of US Dollars)
-
December 31, 2014
FVTPL
repurchase
Payables
0-30 days
125,407
31-90 days
125,138
3,416
-
-
-
-
3,416
103,003
1,096
614,882
498,593
2,041
449,234
26,002
182
125,082
5,719
116
574,501
991
6,552
350,000
48,583
103,003
3,435
1,770,251
350,000
579,888
December 31, 2013
FVTPL
repurchase
Payables
0-30 days
208,651
31-90 days
76,500
-
Over 1 year
-
Over 1 year
-
Total
250,545
Total
285,151
924
-
-
-
-
924
62,022
658
661,547
172,166
53,287
371
330,540
38,847
321
201,822
6,737
377
895,244
588
9,186
5,313
115,309
1,727
2,098,339
223,651
The time interval of the maturity analysis of deposits and remittances was based on the
historical experience of the Bank. If the deposits must be paid in the earliest period, in the
interval time of 0-30 days, the working capital will be increased $105,696,892 thousand and
$78,629,036 thousand as of December 31, 2014 and 2013, respectively.
c) Maturity analysis of derivative financial liabilities.
Net settlement derivative instruments included:
i
Exchange derivative instrument: exchange rate option, NDF, forward, foreign currency
swap and cross-currency swaps (CCS).
ii Interest rate derivative instrument: Interest rate swap option, interest rate swap (IRS) and
assets swap to be settled at net cash flows.
iii Credit derivative instrument: credit default swaps (CDS) contracts.
iv Equity derivative instrument: interest rate swaps (IRS) linked stock index.
v
Commodity derivative instrument: commodity option and commodity linked interest rate
swaps (IRS)
To understand the derivative financial instruments in the consolidated balance sheet, the basic
elements assessed are contractual maturities. The amounts used in maturity analysis are based
on contractual cash flows, so some amounts may not correspond to those shown in the
consolidated balance sheet. The analysis of derivative financial liabilities at net amount is as
follows:
280
Maturity Analysis of Derivative Financial Liabilities (New Taiwan Dollar)
December 31, 2014
Derivative financial liabilities at
FVTPL
Exchange derivative instrument
Interest rate derivative
instrument
Derivative financial liabilities for
hedging
instrument
Total
December 31, 2013
FVTPL
instrument
Others
Derivative financial liabilities for
hedging
instrument
Total
181 Days
91-180 Days
Over 1 Year
- 1 Year
0-30 Days
31-90 Days
22,137
73,207
88,014
25,605
-
208,963
3,549
9,123
12,830
11,719
180,320
217,541
25,686
82,330
100,844
37,324
4,179
184,499
4,179
430,683
0-30 Days
31-90 Days
345
-
630
483
-
4,423
-
828
4,423
181 Days
91-180 Days
Over 1 Year
- 1 Year
Total
Total
(399,732)
(399,732)
432,143
33,386
9,455
-
29,674
-
371,775
304,500
415,810
304,500
10,085
(370,058)
(370,058)
5,449
1,113,867
5,449
759,145
Maturity Analysis of Derivative Financial Liabilities (USD)
(In Thousands of U.S. Dollars)
December 31, 2014
FVTPL
instrument
Credit derivative instrument
Total
December 31, 2013
FVTPL
instrument
Credit derivative instrument
Equity derivative instrument
Commodity derivative
instrument
Total
181 Days
91-180 Days
Over 1 Year
- 1 Year
0-30 Days
31-90 Days
3,730
6,924
8,552
57,577
98,077
174,860
3,730
6,924
68
8,620
31
61
57,669
6,315
104,392
6,346
129
181,335
0-30 Days
31-90 Days
2,002
2,544
4,544
8,548
4,377
54
102
-
34
1,045
285
-
5,422
285
190
4
6,437
9
2,655
8,582
1,157
7
23,369
181 Days
91-180 Days
Over 1 Year
- 1 Year
(6)
(6)
4,538
(173)
(173)
Total
Total
17,465
d) Maturity analysis of off-balance
offf balance sheet items
The Bank conducted the maturity analysis of offoff-balance
f balance sheet items based on the residual
maturities as of the balance sheet dates. For the financial guarantee contracts issued, the
maximum amounts of the guarantees are included in the earliest periods that the guarantee
obligation might have been required to be fulfilled. The amounts used in the maturity analysis
281
of off-balance
offf balance sheet items are based on contractual cash flows, so some amounts may not
correspond to those shown in the consolidated balance sheets.
Off-Balance
Maturity Analysis of Offf Balance Sheet Items
December 31, 2014
0-30 Days
Issued and irrevocable loan
commitments
Irrevocable credit card
commitments
Letters of credit issued yet unused
Other guarantees
Total
December 31, 2013
31-90 Days
Total
443,047
514,313
1,397,067
2,408,888
10,499,584
15,262,899
34,325,557
306,833
5,113,287
40,188,724
17,221,456
565,394
4,332,060
22,633,223
494,469
65,727
812,029
2,769,292
57,539
3,166
1,431,651
3,901,244
1,803,784
2,939,975
15,243,343
53,902,805
941,120
14,629,002
84,735,826
0-30 Days
Issued and irrevocable loan
commitments
Irrevocable credit card
commitments
Letters of credit issued yet unused
Other guarantees
Total
181 Days
91-180 Days
Over 1 Year
- 1 Year
31-90 Days
181 Days
91-180 Days
Over 1 Year
- 1 Year
Total
156
892,404
804,516
1,276,664
8,322,752
11,296,492
31,498,944
323,985
6,230,580
38,053,665
17,979,119
1,361,820
6,156,125
26,389,468
151,688
164,384
675,899
1,796,487
78,098
1,482,784
2,837,546
612,429
2,348,089
11,283,270
50,320,278
1,850,189
16,893,477
80,360,436
e) Maturity analysis of estimated capital inflow and outflow in New Taiwan dollars and in US
dollars
Maturity Analysis of Capital Inflow and Outflow
December 31, 2014
0-10 Days
Main capital inflow on maturity
Main capital outflow on maturity
Gap
67,986,703
41,079,005
26,907,698
11-30 Days
74,123,442
58,579,674
15,543,768
181 Days
91-180 Days
Over 1 Year
- 1 Year
45,605,536
28,643,075
34,119,062
176,143,764
85,021,048
75,079,889
94,977,993
174,313,654
(39,415,512
(39,415,512)) (46,436,814
(46,436,814)) (60,858,931)
(60,858,931 )
1,830,110
426,621,582
529,051,263
(102,429,681)
(102,429,681 )
181 Days
91-180 Days
Over 1 Year
- 1 Year
43,077,347
18,759,693
29,536,119
172,041,996
72,396,198
51,532,311
103,389,515
108,536,808
(29,318,851
(29,318,851)) (32,772,618)
(32,772,618 ) (73,853,396)
(73,853,396 )
63,505,188
417,395,825
422,450,548
(5,054,723)
(5,054,723 )
31-90 Days
Total
December 31, 2013
December 31, 2013
0-10 Days
Gap
74,641,537
41,632,312
33,009,225
11-30 Days
79,339,133
44,963,404
34,375,729
31-90 Days
Total
The above amounts included only New Taiwan dollars held in the onshore branches of the Bank
(excludes foreign currency)
Maturity Analysis of Capital Inflow and Outflow
(In Thousands of U.S. Dollars)
December 31, 2014
Gap
282
1-30 Days
3,686,391
3,319,811
366,580
31-90 Days
1,245,359
1,549,101
(303,742
(303,742))
91-180 Days 181-365 Days Over 1 Year
757,356
679,395
696,862
844,249
1,463,254
1,137,924
(86,893)
(86,893)
(783,859
(783,859))
(441,062
(441,062))
Total
7,065,363
8,314,339
(1,248,976
(1,248,976))
December 31, 2013
Gap
1-30 Days
2,770,695
2,199,937
570,758
31-90 Days
1,410,264
1,642,903
(232,639)
(232,639)
91-180 Days 181-365 Days Over 1 Year
337,927
164,189
756,052
461,615
1,097,880
136,183
(123,688)
(123,688)
(933,691)
(933,691)
619,869
Total
5,439,127
5,538,518
(99,391)
(99,391)
The above amounts are U.S. dollars held in the onshore branches and OBU unless there are
additional explanations
TCSC
1) Risk management policy and structural organization
a) Risk management objectives and policies
In compliance with laws or regulations of authority and considering TCSC’s business
development in the future, TCSC’s Risk Management Office made policies for risk
management and help business units to set up regulations for market risk, credit risk, liquidity
risk, operational risk and legal risk. Those regulations include levels of authority, limits
controlling, stop-loss regulations, stop-dealing mechanisms and dealing of over-the-limits
transactions.
b) Organization structure of risk management
i.
The Board of Directors is the primary authority for issuing guidance for management and
control of all risks and has the ultimate responsibility for overall risk management. All risk
strategies, risk policies, risk management frameworks, and plans and programs for the
promotion of the culture of risk management require the approval of the board of directors.
ii. General Manager, who is authorized by the board of directors, assists the board of directors
in supervising regular reporting, managing exceptions and approving revised regulations of
risk management units.
iii. Risk Management Office, which is under the board of directors and independent from other
business units, is responsible for setting TCSC’s risk management process, monitoring,
measuring and evaluating various risks, producing risk management reports regularly and
reporting to managers and the board of directors.
iv. The internal auditing office, which is under the board of directors and independent from
other business units, is responsible for planning and carrying out all kind of audit and is
directly accountable to the board of directors. It must regularly review and assess the
integrity and actual implementation of various kinds of risk management mechanism, and
timely provide suggestions for improvement so that the risk management mechanism can be
run continually effectively.
vi. Legal compliance office is responsible for planning, managing and conveying laws. It is
also responsible for making sure that all operations and management guidelines are updated
accordingly as related regulations are amended. It also supervises all units’ conduct and
compliance with regulations and legal requirements.
vii. Business units regulate their own risk management process and have the responsibility to
report unusual risk-related events in order to make sure that mechanisms and process of risk
management are properly conducted.
283
c) Methods of risk measurement
i.
Market risk
Value at Risk (VaR) statistically estimates the maximum potential loss TCSC may suffer in
next day and 10 days within a certain confidence interval (99%). TCSC’s risks are classified
by the categories of the assets, the departments and the risk factors and measured with VaR
for TCSC’s management and
a control. Besides, in order to understand how potential extreme
incidents can affect the market risk sensitivity and the profit/loss of investment portfolios,
TCSC performs hypothetical scenario analysis monthly and historical scenario analysis
semiannually using methods for testing stress and risk. In addition, TCSC performs
back-testing of actual financial positions and P&L to validate the accuracy of the risk
models used.
ii. Credit risk
TCSC complies with asset quality controls, rating mechanisms and limits of asset position
when engaging in transactions of financial instruments and trading with counterparties. For
pecuniary and securities finance, TCSC complies with regulations of the authority and
internal control system.
iii. Liquidity risk
To avoid the risk of inability to obtain funds at a reasonable cost within a reasonable
timeframe to meet financial obligations, TCSC’s business units set daily limits of
securities trading and accumulated positions of assets and liabilities. The financial
department manages liquidity risk in accordance with the Regulation for Management of
Liquidity Risk and the Regulation for Utilization of Capital and Funds, and predicts the
supply and demand of capital in the future. So that TCSC could reduce the potential risk of
shortfall in fund.
iv. Operational risk
Operational risk of TCSC increases when the internal control systems and internal auditing
are not conducted effectively. To reduce the operational risk, TCSC evaluates and measures
the risk according to the Regulations for Reporting Operational Losses and builds databases
of operational losses, and identifies types of operational risks and manages the risks.
v. Legal Compliance risk
The Legal Compliance Office is responsible for controlling, evaluating and managing the
legal risk and plans and makes related regulations after considering TCSC’s whole business
activities. It makes sure that all activities are in compliance of laws or related regulations.
2) Risk
a) Market risk
i.
Value at Risk (VaR)
VaR statistically estimates the potential loss of the positions due to adverse market
movements. It is the “maximum potential loss” TCSC may suffer within a certain
confidence interval (99%), so it is still probable that the actual loss is larger than the value at
risk to some extent. The principal evaluation method of VaR is Parametric, statistical
estimate that uses exponentially weighted moving average (EWMA) and deferral factor of
0.94 to weigh adjustment. Asset evaluation uses local valuation Delta-normal method,
284
nonlinear option valuation of derivative financial instrument uses Delta-Gamma method and
no normality returns ratio valuation uses Cornish-Fisher. The investment portfolio variance
VaR, which is an estimate of return variance of equity securities position, is calculated with
variance-co-variance matrix; rate instrument (fixed-income product) is calculated by cash
flows mapping method and the variance of rate-price-return is calculated by
rate-co-variance matrix.
For the Year
Y Ended of 2014
Equity
Interest rate
Foreign exchange
Average
Minimum
Maximum
December
31, 2014
$ 20,664
353
47
$ 7,182
(791)
(791 )
(124)
(124 )
$ 38,190
4,645
937
$ 12,636
52
(7)
(7 )
Average
Minimum
Maximum
December
31, 2013
$ 19,528
1,155
34
$ 10,708
(1,434)
(1,434 )
(221)
(221 )
$ 56,696
5,183
1,110
$ 11,273
(18))
(18
676
For the Year
Y Ended of 2013
Equity
Interest rate
Foreign exchange
ii. Stress test
The stress test is used to measure the greatest potential loss of the portfolio of risk assets
under the worst scenarios. TCSC has two forms of stress test to understand investment
position of the company in a market situation with possible abnormal loss: first test, daily
scenario; second test, every six months using historical events.
For the Year
Y Ended of 2014
Average
Scenario stress test
Minimum
Maximum
December
31, 2014
$ 21,052 $ 7,496 $ 38,379 $ 12,680
For the Year Ended of 2013
Scenario stress test
Average
Minimum
Maximum
December
31, 2013
$ 20,718
$ 11,484
$ 61,318
$ 11,930
iii. Sensitivity analysis
The bond trading department of TCSC is engaged in bond investment with fixed coupon
interest rate. The fair values of bonds fluctuate with change in market interest rate. Thus,
TCSC borrowed bonds to hedge the variance of market prices. IF the market price per unit
increased by 5%, the fair value of the bonds would have increased by $78,414 thousand and
$106,012 thousand as of December 31, 2014 and 2013, respectively.
Stocks and funds held by the dealing department and brokerage department of TCSC are
affected by the fluctuations of market prices. If the market price of financial instruments
increased by 5%, the fair
f value would have increased by $66,213 thousand and $78,873
thousand as of December 31, 2014 and 2013, respectively.
285
The market risks of TCSC’s derivative financial instruments were described as follows:
i) Futures and options
If TCSC engages in transactions of futures and options for hedging, the income (loss)
resulting from the fluctuations of TAIEX futures will approximately be offset by the
income (loss) of hedged items (operating securities - underwriting and dealing). To
comply with the regulations, TCSC could only engage in futures transactions in the
scope of total fair value of futures in stock and below 20% of net value of hedging
securities held by the dealing and underwriting departments. Therefore, the market
risk is insignificant.
If TCSC holds options for trading, the market prices of options fluctuate according to
the market prices of underlying securities. The maximum loss on such options is the
premiums paid when entering into the contract. Therefore, the market risk is
insignificant. TCSC has appropriate risk control management and has set up stop-loss
points to monitor outstanding positions and price fluctuations. When the balance of the
margin account is lower than an agreed level (the “maintenance margin”), TCSC will
either settle the deal or put in more deposits to the initial margin.
ii) Warrants
Market risk on issued warrants is mainly from changes in market prices of underlying
securities. TCSC manages the market risk by adopting a dynamic hedging strategy to
adjust the positions of warrants and underlying securities.
iii) Asset swap transactions - convertible bonds
The market risk of asset swap transactions - convertible bonds is evaluated by the
equivalent amounts of market risk. TCSC will calculate to check if the transactions
exceed the limits based on the standards of the authority. The expected equivalent
amounts of market risk represent the maximum loss TCSC may suffer. As of December
31, 2014 and 2013, the expected equivalent amounts of market risk were $103,783
b) Credit risk
The table below shows the credit ratings classification provided by TCRI and Taiwan Ratings.
TCSC uses this table as reference in rating financial instruments and for monitoring credit limits
of counterparties.
Credit Ratings
Taiwan Credit Ratings
1-4
5-6
7-9
above twAAA - twAtwBBB+ - twBBBtwBB - twCCC below
Credit risk represents the loss that TCSC would incur if a counterparty or an issuer of securities
or other instruments held by TCSC fails to perform under its contractual obligations, or upon
deterioration of the credit quality of third parties’ securities or obligation held by TCSC.
Primary elements of credit risk of TCSC’s financial instruments include the degree of credit risk
centralization, components of financial instruments, amounts of contracts, and other receivables.
As of December 31, 2014 and 2013, maximum credit exposures of all kinds of financial assets
(except fair value of collaterals) held by TCSC approximate carrying values. Therefore, no
additional disclosure needed to be presented.
286
c) Liquidity risk
TCSC relies on bank borrowings as a significant source of liquidity. As of December 31, 2014
and 2013, TCSC had available unutilized overdraft and short-term bank loan facilities of
approximately $3,022,000 thousand and $2,822,000 thousand, respectively.
Liquidity risk tables
The table below shows the remaining contractual maturity of TCSC’s non-derivative financial
liabilities with agreed repayment periods. The table had been drawn up based on the
undiscounted cash flows of financial liabilities from the earliest date on which TCSC can be
required to pay. The table included both interest and principal cash flows.
Specifically, bank loans with a repayment on demand clause were included in the earliest time
band regardless of the probability of the banks choosing to exercise their rights. The maturity
dates for other non-derivative financial liabilities were based on the agreed repayment dates.
Short-term borrowing and long-term borrowing interest rates were based on fixed rates. TCSC
evaluated interest rate change in the future will not have major influence, so the undiscounted
amount was derived from the latest interest payments.
On demand
to 3 months
1+ year
3-12 months
December 31, 2014
Non-derivative financial liabilities
Non-interest bearing
Fixed interest rate liabilities
$ 2,473,655
5,648,107
$
-
$
7,219
-
$ 8,121,762
$
-
$
7,219
$ 2,780,700
6,901,779
$
-
$
7,199
-
$ 9,682,479
$
-
$
7,199
December 31, 2013
Non-derivative financial liabilities
Non-interest bearing
The abovementioned non-derivative financial liabilities caused by fluctuations in interest rate
will change with the floating interest rate and the estimated interest rate at the end of the
reporting period.
The following table is TCSC’s liquidity analysis of its derivative financial instruments. The
table was based on the undiscounted contractual net cash inflows and outflows on derivative
instruments that settle on a net basis.
287
On demand
to 3 months
December 31, 2014
Net settled
Asset swap-IRS contracts
Asset swap option contracts
$
2,364
7,881
178,386
$ 188,631
December 31, 2013
Net settled
Warrants contracts
Asset swap-IRS contracts
Asset swap option contracts
$
2,119
2,205
1,784
264,121
$ 270,229
SPECIFIC RISK FROM FUTURES DEALING
1) Futures brokerage business
Customers pay margin deposits when entering into futures transactions and short options contracts.
Customer’s gain or loss results from the leverage on the margin deposits. To protect TCSC from
harm arising from customers’ huge losses, the margin accounts of customers are re-evaluated daily
on the basis of the market prices of the outstanding futures and options contr
contracts.
t acts. TCSC will
inform customers immediately to put in additional margin deposits when their margin accounts fall
below the maintenance margin. If the customers fail to do so, TCSC settles their position by
offsetting the contracts.
2) Futures dealing business
TCSC pays margin deposits when entering into futures contracts. TCSC also pays the margin
deposits for short options contract. The margin account of TCSC is re-evaluated on the basis of
the market prices of the outstanding futures and options contracts. If the margin is less than the
maintenance level, TCSC should either deposit additional margin or offset the contracts. TCSC’s
futures contracts and options contracts outstanding As of December 31, 2014 and 2013 were as
follows:
December 31
2014
Outstanding futures contracts
Outstanding options contracts
Margin deposits and market value of buying options contracts
(included in “financial assets measured at FVTPL”)
Market value of sell options contracts (included in “financial
liabilities measured at FVTPL”)
288
2013
147 unit
952 unit
282 unit
1,892 unit
$ 216,175
$ 237,317
2,364
2,205
TCIFI
TCIFI’s major financial instruments include (equity investments, trade receivable, trade payables, and
borrowings). TCIFI’s Corporate Treasury function monitors and manages the financial risks relating
to the operations through internal risk reports which analyze exposures by degree and magnitude of
risks. These risks include market risk (mainly interest rate risk), credit risk and liquidity risk.
1) Credit risk
In order to minimize credit risk, management of TCIFI determines credit limits, credit approvals
and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts.
In addition, TCIFI reviews the recoverable amount of each individual trade debt at the end of the
reporting period to ensure that adequate allowances are made for irrecoverable amounts. In this
regard, management believes TCIFI’s credit risk was significantly reduced.
TCIFI did transactions with a large number of unrelated customers and, thus, no concentration of
credit risk was observed.
As of the reporting date, TCIFI has no receivables with overdue and unrecognized allowance for
credit losses.
Credit risk represents the loss that TCIFI would incur if a counterparty or an issuer of securities or
other instruments held by TCIFI fails to perform under its contractual obligations, or upon
deterioration of the credit quality of third parties’ securities or obligation held by TCIFI. Primary
elements of credit risk of TCIFI’s financial instruments include the degree of credit risk
centralization, components of financial instruments, amounts of contracts, and other receivables.
As of December 31, 2014 and 2013, financial assets with credit risk held by TCIFI were $186,412
thousand and $198,607 thousand (mainly including receivables and refundable deposits), maximum
credit exposures of those kinds of financial assets (except fair value of collaterals) held by TCIFI
approximate carrying values.
Assessment for impairment was as follows:
December 31
2014
2013
Allowance for
Allowance for
Doubtful Trade
Doubtful Trade
Receivables
Receivables
Receivables
Receivables
Individual impairment
with objective
evidence
Individual impairment
with no objective
evidence
$
7,516
$
5,516
$
-
$
-
184,087
$ 191,603
$
5,516
198,284
$ 198,284
$
-
TCIFI considered the credit risk of bank deposits are not significant.
2) Liquidity risk
TCIFI manages liquidity risk by monitoring and maintaining a level of cash and cash equivalents
deemed adequate to finance TCIFI’s operations and mitigate the effects of fluctuations in cash
flows. In addition, management monitors the utilization of bank borrowings and ensures
compliance with loan covenants.
289
TCIFI relies on bank borrowings as a significant source of liquidity. As of December 31, 2014
and 2013, TCIFI had available unutilized short-term bank loan facilities set out in B. below.
a) Liquidity and interest risk rate tables for non-derivative financial liabilities
The following tables detail TCIFI’s remaining contractual maturity for its non-derivative
financial liabilities with agreed repayment periods. The tables had been drawn up based on the
undiscounted cash flows of financial liabilities from the earliest date on which TCIFI can be
required to pay. The tables included both interest and principal cash flows. Specifically,
bank loans with a repayment on demand clause were included in the earliest time band
regardless of the probability of the banks choosing to exercise their rights. The maturity dates
for other non-derivative financial liabilities were based on the agreed repayment dates.
To the extent that interest flows are floating rate, the undiscounted amount was derived from the
interest rate curve at the end of the reporting period.
December 31, 2014
On Demand
or Less than
1 Month
1-3 Months
$ 358,690
-
$ 20,036
-
$
$ 358,690
$ 20,036
On Demand
or Less than
1 Month
1-3 Months
$ 148,570
-
$ 269,000
-
$
$ 148,570
$ 269,000
$
3 Months to
1 Year
1-5 Years
5+ Years
$
62,450
$
-
$ 10,850
$ 62,450
$
-
3 Months to
1 Year
1-5 Years
5+ Years
200
$
60,200
$
-
200
$ 60,200
$
-
Non-derivative
financial
f
liabilities
10,850
December 31, 2013
Non-derivative
financial liabilities
Bank loans with a repayment on demand clause were included in the “on demand or less than 1
month” time band in the above maturity analysis. As of December 31, 2014 and 2013, the
aggregate undiscounted principal amounts of these bank loans amounted to $353,400 thousand
and $148,000 thousand, respectively. Taking into account TCIFI’s financial position,
management does not believe that it is probable that the banks will exercise their discretionary
rights to demand immediate repayment. Management believes that such bank loans will be
repaid three months after the reporting date in accordance with the scheduled repayment dates
set out in the loan agreements. At that time, the aggregate principal and interest cash outflows
will amount to $378,726 thousand.
290
b) Financing facilities
December 31
Unsecured bank loan facilities, reviewed annually and
payable at call:
Amount used
Amount unused
2014
2013
$ 114,500
445,500
$ 178,000
212,000
$ 560,000
$ 390,000
3) Market risk
TCIFI was exposed to interest rate risk because TCIFI borrowed funds at both fixed and floating
interest rates. The risk is managed by TCIFI by maintaining an appropriate mix of fixed and
floating rate borrowings.
The carrying amount of TCIFI’s financial assets and financial liabilities with exposure to interest
rates at the end of the reporting period were as follows:
December 31
2014
Cash flow interest rate risk
Financial assets
$
2013
3,121
378,395
$
3,006
416,331
If interest rates had been 1% higher and all other variables were held constant, TCIFI’s net cash
outflow for the years ended December 31, 2014 and 2013 would have increased by $3,753 thousand
and $4,133 thousand, respectively.
Financial risk of TCLIA, TCGIA and TCVC are minor, therefore, no additional disclosure needed to be
presented; TCFC and TCF HK have no financial risk information because of no actual operating activities.
ff. Cash flow hedge
TCB
Cash flow risk is the risk of financial liabilities primarily caused by fluctuations in interest rate. The
risk is considered to be material to the Bank, and the Bank entered IRS contracts to manage the risk.
Please refer to Note 27 for the changes in the realized loss on cash flow hedging financial instruments
for the year ended December 31, 2014 and 2013.
Hedged Items
Subordinated financial debentures
Hedging
Instruments
Notional
Amount
IRS contracts
$ 200,000
Fair Value
December 31,
December 31,
2014
2013
$
(4,179
(4,179))
$
(5,449
(5,449))
Expected
Period of
Cash Flow
Generated
Expected
Period to
Recognize
through Profit
and Loss
January 2015 January 2017
January 2015 January 2017
291
43. RELATED PARTY TRANSACTIONS
a. Related party
Related Parties
Relationship with the Bank
Ho Hsin Construction
Others - its chairman has two generations blood relations with
the Bank’s chairman.
Kymco Industrial Corporation (KIC), Key management personnel - the Bank and subsidiaries’
directors, supervisors, managers and their spouses; chairman
Hong Guang Investment Co.
of the board of directors, general manager and their relatives
(HGIC) and managements
within two generations.
b. Significant related party transactions
Balances and transactions between the Bank and subsidiaries, which were related parties of the Bank,
had been eliminated on consolidation and are not disclosed in this note. Details of transactions of the
Bank and subsidiaries with other related parties were disclosed below:
1) Transactions of derivative financial instruments
December 31, 2014
Derivative
Instrument
Contract
Related Party
Key Management
Buy option
Key Management (each
transaction is lower than 10%
of the respective account
balance)
Structured
instrument
Period
Notional
Amount
2014.08.22-2015.02.24
$ 30,844
Come to maturity during
December 24, 2015 to
August 04, 2024
Gain (Loss)
on Valuation
$
20,341
(8,002 )
-
$
Balance Sheet
Account
Balance
Financial assets at
FVTPL
Other financial
liabilities
(8,002 )
$ 22,822
20,341
$ 43,223
December 31, 2013
Derivative
Instrument
Contract
Related Party
Key Management (each
transaction is lower than 10%
of the respective account
balance)
Period
Structured
instrument
Come to maturity during
April 2, 2014 to
December 3, 2023
Buy option
Matured on January 16,
2014
Notional
Amount
$ 16,626
Gain (Loss)
on Valuation
$
782
-
Other financial
liabilities
-
Financial assets at
FVTPL
“
$
Balance Sheet
Account
Balance
-
$ (16,626 )
782
$ (15,844 )
2) Loans, guarantees and deposits
a) Loans
Please refer to Table 10.
b) Deposits
Amount
% of Total
Interest Rate
(%)
Interests
Expenses
% of Total
December 31, 2014
Deposits
184 key management
13 other related parties
$ 3,681,847
91,499
1.07
0.03
0.00-11.00
0.00-1.44
$
27,261
319
0.665
0.008
(Continued)
292
Amount
% of Total
Interest Rate
(%)
Interests
Expenses
% of Total
December 31, 2013
Deposits
185 key management
11 other related parties
$ 2,845,257
65,434
0.83
0.02
0.00-11.00
0.00-1.44
$
13,529
234
0.334
0.005
(Concluded)
In accordance with the Banking Law, credits extended by the Bank to any related party should
be fully secured, except for customer loans. The terms of credits extended to related parties
should be similar to those extended to non-related parties.
3) Except those presented above, the transactions with related parties
Short-term
Bills and Bonds
Sold under
Repurchase
Agreements
Key management
$ 32,814
Key management
$ 49,678
The terms of the transactions with related parties were similar to those with non-related parties
except for the interest rates for deposits by employees, which is about 11%.
4) Operating leases
The Bank leases some office premises from its related parties.
Related Party
Other related parties
Location of
Office Premises
Ling Ya and Po
Ai Branch
Guarantee Deposits (Included in
Refundable Deposits)
December 31
2014
2013
$ 250,000
$ 250,000
Rental Paid
2014
2013
$
4,524
$
5,480
Other related parties and key management have blood relations with the Bank’s chairman within
two generations.
The rental paid to Ho-Hsin Construction is based on the imputed interest of guarantee deposits.
The terms of the transactions with related parties were similar to those with non-related parties.
c. Compensation of key management personnel
The remuneration of directors and other members of key management personnel for the years ended
December 31, 2014 and 2013 was as follows:
293
2014
2013
Short-term benefits
Post-employment benefits
Termination benefits
Other long-term benefits
Share-based payments
$ 265,415
2,366
2,100
53
16,694
$ 206,714
601
91
30,600
$ 286,628
$ 238,006
The remuneration of directors and key executives was determined by the remuneration committee
having regard to the performance of individuals and market trends.
44. MORTGAGE ASSETS
In addition to Note 10, the following assets have been mortgaged to banks (except the Bank) and bills
corporations for security of short-term financing:
December 31
Pledged time deposits (included in “other financial assets - restricted
assets”)
Mutual funds (included in “financial assets at FVTPL”)
2014
2013
$ 282,000
505,047
$ 282,000
502,833
$ 787,047
$ 784,833
45. SIGNIFICANT CONTINGENCIES AND UNRECOGNIZED COMMITMENTS
In addition to Notes 23, 24 and 36 (8), contingencies and commitments of the Bank and subsidiaries were
summarized as follows:
Significant commitments
a. As of December 31, 2014 and 2013, commitments of the Bank and subsidiaries were as follows:
December 31
Trustee collections payable
Trustee of agents loans
Trustee of agents in sale traveler’s check
Guarantee notes Payable
Trust assets
Custody securities
2014
2013
$ 16,278,819
16,278,819
58,397
193,200
73,004,270
10,562,806
$ 13,092,914
13,092,914
63,666
226,425
67,366,469
4,513,586
b. Under the Trust Business Law, the Bank’s trust balance sheets, trust income statements and details of
trust assets of the Trust Accounts were as follows:
294
1) Trust balance sheets
December 31
2014
2013
Trust assets
Deposits
Financial assets
Bonds
Stocks
Mutual funds
Real estates
Advances
Securities
$
899,542
$
840,217
4,834,221
456,950
51,811,929
14,681,628
320,000
-
6,566,949
466,438
50,646,463
8,338,880
420,000
87,522
$ 73,004,270
$ 67,366,469
$
$
Trust liabilities and capital
Payables
Buying securities
Withdrawn money
Trust capital
Cash
Advances
Real estates
Securities
232
-
218
1,577
58,002,410
32,0000
14,681,628
-
58,518,272
420,000
8,338,880
87,522
$ 73,004,270
$ 67,366,469
2) Details of trust assets
December 31
2014
2013
Trust assets
Deposits
Short-term investments
Bonds
Stocks
Mutual funds
Real estates
Advances
Securities
$
899,542
$
840,217
4,834,221
456,950
51,811,929
14,681,628
320,000
-
6,566,949
466,438
50,646,463
8,338,880
420,000
87,522
$ 73,004,270
$ 67,366,469
295
3) Trust income statements
2014
2013
Trust revenue
Interest revenue
Realized capital gain
Other revenue
$ 12,199
24,767
36,966
Trust expenses
Management charges
Contract charges
Income before tax
Income tax expense
Net income (loss)
$
795
289
35,531
36,615
37,191
37,191
13,995
150
14,145
(225)
(3,461)
22,470
(3,633)
$ (3,686)
$ 18,837
The above accounts of the trust investment business in overseas securities were recorded in the
OBU’s ledgers.
Short-term investments were as follows:
December 31
Mutual funds
Bonds
2014
2013
$ 89,182
10,485
$ 90,979
11,555
c. Significant contracts
1) As of December 31, 2014 and 2013, purchase contracts for electronic processing equipment and
software, network and decoration, amounted to about $73,323 thousand and $126,832 thousand.
The amounts paid were as follows:
December 31
2014
Construction in progress
Prepayment for equipment
$
2) The contract amounts of unexpired derivative transactions:
3) The contract amounts of unexpired lease agreements:
2013
1,088
34,183
$ 17,384
43,545
$ 35,271
$ 60,929
Refer to Note 8.
Refer to Note 39.
Contingent Liabilities
1) Termination of lawsuit
Macauto Industrial Co., Ltd. (Macauto) engaged in foreign currency option contracts with the Bank
during the period from year 2006 to 2008. Macauto filed an appeal against the Bank to claim
296
compensation for its option transaction losses $224,639 thousand. The Bank believes these option
transactions are rational and the Bank has no legal obligations to compensate Macauto. The
Supreme Court sentenced that the Bank win the lawsuit on September 3, 2014.
2) Litigation matters in progress as of December, 31, 2014
Structured notes valued approximately $2,630 thousand are under litigation. However the Bank
cannot reach a reliable estimate of loss as of the date the financial statements were authorized for
issue due to its uncertainty.
46. PROFITABILITY
(%)
Return on total assets
Return on net worth
For the Year Ended
December 31
2014
2013
0.71
0.68
0.60
0.60
10.54
11.06
8.91
9.77
26.89
27.74
Items
Before income tax
After income tax
Before income tax
After income tax
Profit margin
Note 1: Return on total assets = Income before (after) income tax ÷ Average total assets.
Note 2: Return on net worth = Income before (after) income tax ÷ Average net worth.
Note 3: Profit margin = Income after income tax ÷ Total operating revenues.
47. INFORMATION RELATED TO BORROWERS, GUARANTORS AND COLLATERAL
PROVIDERS AS INTEREST PARTIES
Category
Account
Volume
Situation
Overdue
Normal
(Note C)
Amounts
December 31, 2014
Consumer loans (Note A)
Loans for employees’ house mortgage
Other borrowers (Note B)
Guarantees
Collateral providers
321
543
3
117
2
$
80,533
2,363,767
267,160
639,043
247,000
$
80,533
2,363,767
267,160
639,043
247,000
$
-
December 31, 2013
Consumer loans (Note A)
Loans for employees’ house mortgage
Other borrowers (Note B)
Guarantees
Collateral providers
347
517
2
123
2
84,956
2,075,944
252,500
645,759
252,500
84,956
2,075,944
252,500
645,759
252,500
-
The interest parties mentioned above are regulated under the Banking Law Article 33-1.
297
Note A: Consumer loans are regulated under the Banking Law Article 32.
Note B: Other borrowers are those other than of consumer loans and loans for employees’ house
mortgage.
Note C: Overdue loans represent the amounts of reported overdue loans pursuant to the Regulations.
48. FINANCIAL RATIOS OF FUTURES
As of December 31, 2014 and 2013, financial ratios of TCSC’s futures department are in compliance with
the requirements of the Rules Governing Futures Commission Merchants. Please refer to Table 5
(attached). Since TCFC has stopped operating since October in 2013, financial ratios of TCFC needn’t to
be disclosed for the years ended December 31, 2013 and 2012.
In compliance with the Regulations Governing Futures Commission Merchants, when the shareholders'
equity of a futures commission merchant is less than 60% of minimum paid-in capital, or when adjusted net
capital is less than 20% of the total amount of customer margins required for the open positions of futures
traders, the futures commission merchant shall immediately cease accepting orders from futures traders and
submit a rectification plan to the FSC and FSC-designated institutions.
49. EXCHANGE RATE INFORMATION OF FOREIGN CURRENCY FINANCIAL ASSETS AND
LIABILITIES
The Bank and subsidiaries’ significant foreign-currency financial assets and liabilities were as follows:
(In thousands)
Currency
Amount
Currency
Exchange Rate
New Taiwan
Dollars
December 31, 2014
Financial assets
Monetary items
Monetary items
USD
CNY
JPY
AUD
EUR
$
2,543,463
2,812,721
9,309,247
83,596
35,301
31.66
5.10
0.26
25.92
38.48
$ 80,513,321
14,357,281
2,462,885
2,166,866
1,358,252
USD
AUD
ZAR
CNY
HKD
2,718,046
91,509
2,134,280
1,265,849
340,983
31.66
25.92
2.73
5.10
4.08
86,039,746
2,371,970
5,833,747
6,461,412
1,391,789
USD
CNY
2,261,991
1,501,458
29.93
4.94
67,690,072
7,416,214
(Continued)
December 31, 2013
Financial assets
Monetary items
298
Currency
Amount
Currency
JPY
AUD
EUR
Monetary items
$
USD
AUD
ZAR
CNY
JPY
Exchange Rate
7,686,673
65,552
34,335
0.28
26.69
41.25
2,606,300
132,358
974,445
541,283
4,158,590
29.93
26.69
2.86
4.94
0.28
New Taiwan
Dollars
$
2,190,597
1,749,789
1,418,421
77,993,540
3,533,033
2,786,722
2,673,579
1,185,142
(Concluded)
50. ADDITIONAL DISCLOSURES
Following are the additional disclosures for the Bank and its investees:
a. Significant transactions, and b. investees’ information:
1) Loans of funds to others: The Bank - not applicable; investees - Table 1 (attached).
2) Endorsement/guarantee provided:
3) Marketable securities held:
None.
The Bank and TCSC - not applicable; investees - Table 2 (attached).
4) Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 10%
of the paid-in capital: None.
5) Acquisition of individual real estate at costs of at least NT$300 million or 10% of the paid-in
capital: None.
6) Disposal of individual real estate at prices of at least NT$300 million or 10% of the paid-in capital:
None.
7) Financial assets securitization:
None.
8) Allowance of service fees to related parties amounting to at least NT$5 million:
None.
9) Receivables from related parties amounting to at least NT$300 million or 10% of the paid-in
capital: None.
10) Sale of NPL:
None.
11) Other significant transactions which may affect the decisions of users of financial reports:
12) The related information and proportionate share in investees:
13) Derivative transactions by investee:
b. Investment in Mainland China:
None.
Table 4 (attached).
Refer to Notes 8 and 41.
None.
c. Business relationships and significant transactions among the parent company and subsidiaries:
6 (attached).
Table
299
51. SEGMENT INFORMATION
In accordance with IFRS 8 ”Operating Segments” endorsed by the FSC, disclosure of segment information
is based on the information reported to the chief operating decision maker (“CODM”) for the purposes of
resource allocation and assessment of segment performance. The Bank and subsidiaries’ reportable
segments under IFRS 8 were as follows:
a. Retail Banking Unit - mainly provides financial products and services to individual consumer, including
consumer loans, mortgage loans, savings, credit card and personal finance management, etc. and its
major revenues are interest income and commission fees.
b. Wholesale Banking Unit - mainly provides financial products and services to corporation, government
institution and financial institutions. This segment is engaged in loans, savings, financing businesses,
factoring receivables, guarantee and finance management, etc. and its major revenues are interest
income and commission fees.
c. Financial Marketing division - mainly provides financial products marketing, fund dispatching and
foreign exchange, derivative financial products and fixed income products investing.
d. Hong Kong Branch – the only overseas branch of the Bank, mainly provides loans, savings and
financing businesses.
e. Others - including brokerage, dealing and underwriting of securities and futures, futures exchanges and
transactions and other business except a. and b.
Other operating segments, including fund and trust management, do not meet the threshold for individual
reportable segment.
The Bank and subsidiaries’ operating results for each segment mainly come from interest revenue and
commission and fee revenue. Information reported to the CODM for the purposes of segment
performance is based on net interest revenue and commission and fee revenue, presented as net amount
(total interest revenue minus total interest expense; total commission and fee revenue minus total charges
for commissions and fees).
Internal pricing and transfer pricing adjustments have been reflected in segment performance evaluation.
Revenue generated from external customers was allocated appropriately on the basis of the agreed
standards for inter-segment revenue sharing.
Inter-segment transactions are arm’s-length transactions.
The internal report of the Bank and subsidiaries is prepared with operating income as the main account for
use by the decision-maker; the report includes net interest revenue, bad-debt expenses and provision for
losses on guarantees, commission and fee revenue, net gains or losses from financial instrument and other
gains and losses. This measure excludes non-recurring items, such as litigation costs.
The analysis of reportable segment is the information used in the internal report to the CODM, including
segment income, segment assets, segment liabilities and other information.
300
301
$
$ 146,219,715
Assets of reportable segments
Other assets
(178,563 )
2,889,159
2,766,939
2,002,933
(6,536,981 )
(481,951 )
3,272,458
(505,519 )
5,386,143
2,902,314
8,288,457
$ 309,741,687
162,905,692
$
$
$
-
$
$
-
-
$
$
313,163
5,950,603
772,798
119,458
984,294
(1,182,055 )
(18,390 )
1,135,174
(362,376 )
231,205
1,000,662
1,231,867
$
$
$342,179,781
$285,893,637
2,989,894
119,458
2,577,047
(6,618,448 )
(721,177 )
3,352,270
(362,376 )
4,773,740
3,221,650
7,995,390
$
$
$
$
(1,668,532 )
(60,542 )
(250,798 )
(119,458 )
(186,553 )
566,787
(250,798 )
-
5,247
(516,821 )
(511,574 )
$
$
$420,694,262
$285,833,095
167,544,490
2,739,096
2,390,494
(6,051,661 )
(721,177 )
3,101,472
(362,376 )
4,778,987
2,704,829
7,483,816
No single customer exceeds 10% of the Bank’s and subsidiaries’ operating revenue.
The operating revenues and identifiable assets from TCF HK and Hong Kong Branch, the Bank’s only
overseas subsidiary, are not material and the primary operating geographical area of the Bank and
subsidiaries is Taiwan.
Total liabilities
$
-
-
$
$340,511,249
80,183,013
$
-
-
$ 436,895,922
$453,377,585
$171,635,615
$
519,450
$
(975,042 )
(333,682 )
(122,220 )
(117,653 )
(70,582 )
625,816
(122,220 )
-
6,268
(566,069 )
(559,801 )
$170,231,003
$
786,738
(349,870 )
519,450
-
83,123
(541 )
82,582
$
$
$
$
Total assets
$150,202,909
767,542
$
$ 344,565,894
$ 310,075,369
$
117,653
2,073,515
(7,162,797 )
(481,951 )
3,394,678
(505,519 )
5,379,875
3,468,383
8,848,258
Liabilities of reportable segments
Other liabilities
$
255,670
(3,881,071 )
(246,000 )
767,542
-
2,839,162
1,799,781
4,638,943
283,747
3,666,452
$
$129,740,125
930,104
$
$
$
$
117,653
34,601
(1,586,913 )
(2,528 )
326,956
(505,519 )
632,019
1,132,124
1,764,143
Total
$
550,345
(1,205,452 )
(456,787 )
930,104
-
1,620,250
421,748
2,041,998
1,844,657
2,440,759
$
Adjustments
and
Eliminations
Net income
$
$
)
)
)
)
(62,828 )
(2
(45,668
(23,853
(62,828
-
5,288
1,407
6,695
Total
Assets of reportable segments
Other assets
Net interest
Commission and fee revenue, net
Net revenue
Share of profits of associates accounted for
using the equity method
Other gains
Operating expenses
Income before income tax
Income tax expense
Total liabilities
-
$
$
$
Others
$ 472,647,379
$
-
872,591
932,190
(245,300 )
872,591
-
189,081
(3,380 )
185,701
Hong Kong
Branch
$ 343,590,852
93,305,070
$ 183,377,210
$
$
$
Financial
Marketing
Liabilities of reportable segments
Other liabilities
$ 159,060,280
869,791
376,198
(4,129,600 )
(60,000 )
869,791
-
2,851,226
1,831,967
4,683,193
$ 157,748,443
$
$
Individual
Banking
Total assets
1,388,168
730,528
(1,155,316 )
(395,570 )
1,388,168
-
Net income
1,702,261
506,265
2,208,526
$
Net interest
Commission and fee revenue, net
Net revenue
Share of profits of associates accounted for
using the equity method
Other gains
Operating expenses
Income before income tax
Income tax expense
Corporate
Banking
Segment income and assets
302
Lender
Borrower
Tien Lung Logistics Ltd.
Finance and Investment
Other receivables
No
8,710
$
6,374
Ending
Balance
$
8,710
Actual
Borrowing
Amount
7
Interest
Rate
(%)
Note A
Nature of
Financing
$
8,710
Business
Transaction
Amount
Note A
$
-
Amount of
Reason for Allowance for
Short-term
Doubtful
Financing
Loans
Note B: The limit on financier’s total financing is up to 40% of the financier’s net asset value; the limit for individual borrower is up to 20% of the total financing.
$
Highest
Related Balance for the
Party
Period
Note A: An inter-company business transaction calls for a loan arrangement.
1
No.
Financial Statement
Account
LOANS OF FUNDS TO OTHERS
FOR THE YEAR ENDED DECEMBER 31, 2014
(In Thousands of New Taiwan Dollar, Unless Stated Otherwise)
Item
Land
$
Collateral
13,571
Value
$
12,805
(Note B)
Funding Limit
for Each
Borrower
$ 25,609
(Note B)
Aggregate
Financing
Limit
Note
TABLE 1
303
and Investment
December 31, 2013
Stocks
Ta Chong Ventures Ltd.
Stocks
Central Leasing Co., Ltd
Great World Department Store
Hsiung Ho Airplane Leasing Corp, Ltd.
FineTek Co., Ltd.
Biodenta Corporation
Ezconn Corporation
Innopharmax Corporation
SuperAlloy Industrial Co., Ltd
Tennrich International Corp.
E&R Engineering corp. , Ltd
Magnate Technology Co., Ltd.
Savior Lifetec Corporation
Transcom,Inc.
Great tree pharmacy Co., Ltd
Global PMX Co., LTD.
Jetbest Corporation Co., Ltd
Taiwan Chelic Corp. Ltd
ProLight Opto Technology Corporation
Guang Yu International Investment Co.,
Ltd.
Rafael Microelectronics Inc.
Guang Yu International Investment Co.,
Ltd.
Chain Wave Co., Ltd.
Excelsior Bio-System, Inc.
Stocks
Central Leasing Co., Ltd
Great World Department Store
Hsiung Ho Airplane
r
Leasing Corp, Ltd.
Type and Name of Marketable
Securities (Note A)
and Investment
December 31, 2014
Holding Company Name
MARKETABLE SECURITIES HELD
DECEMBER 31, 2014 AND 2013
Financial assets carried at cost
-
Financial assets carried
r
at cost
-
-
Financial Statement Account
-
-
Relationship with the Holding
Company (Note B)
15,916,134
2,045,750
639,285
2,000,000
200,000
100,000
100,000
346,000
51,000
50,000
12,000
15,000
255,000
11,000
208,000
100,000
3,000
300,000
10,000
5,000
8,000
13,000
15,916,134
958,793
639,285
Shares
(Thousands)
$
20,457
-
20,000
9,000
7,000
10,000
49,997
613
1,496
590
1,352
1,454
276
9,963
3,412
94
22,671
718
416
866
272
7,823
-
9.59
2.17
2.95
19.07
0.91
0.49
1.00
0.94
0.04
0.08
0.02
0.01
0.42
0.02
0.42
0.06
0.01
1.43
0.01
0.02
0.01
0.03
9.59
2.17
2.95
Ending Balance
Carrying
Amount
Percentage of
(Note C)
Ownership
$
-
-
-
-
49,997
613
1,496
590
1,352
1,454
276
9,963
3,412
94
22,671
718
416
866
272
Fair Value
Note D
Note D
Note D
Note D
Note
TABLE 2
304
Note D: The investees had recognized all impairment losses in 2004 and 2006.
Note C: If measured at fair value, the book value is the fair value net of accumulated impairment; if measured at non-fair value, the book value is the original acquisition cost or the carried at amortized cost and net of accumulated impairment.
Note B: If the securities issuer is non-related party, the field is not filled.
Note A: The securities in this table are Stocks, Bonds, Mutual funds and Derivative securities referred to in IAS 39.
305
Period
Nonperforming
Receivables
$
-
NPL (Note A)
$
144,130
475
4,354
73,378
222,337
$
December 31, 2013
Ratio of NPL Allowance for Coverage Ratio
(%)(Note B)
Credit Losses
(%) (Note C)
0.01
$ 1,121,878
18,729.18
0.00
1,312,143
65,738.63
0.22
347,910
168.11
0.15
108,110
10,567.94
0.02
1,117,175
48,362.55
0.20
139,403
186.85
0.11
4,146,619
1,415.79
TABLE 3
2,063,191
263,381
1,926,901
257,564
172,134
141,831
$
December 31, 2013
Ratio of
Nonperforming Allowance for Coverage Ratio
Receivables Receivables (%) Credit Losses
(%)
$ 6,368,397
$
201,751
9,018,591
31,009
-
Loans
$ 48,062,191
75,624,939
94,525,615
705,195
10,832,198
37,942,594
267,692,732
103,650
119,349
December 31, 2014
Ratio of
Nonperforming Allowance for Coverage Ratio Nonperforming
Receivables Receivables (%) Credit Losses
(%)
Receivables
$ 6,677,343
$
191,807
$
9,513,795
24,786
-
December 31, 2014
Ratio of NPL Allowance for Coverage Ratio
(%) (Note B)
Credit Losses
(%) (Note C) NPL (Note A)
$
739,179
$
5,990
1,584,878
1,996
0.15
1,422,673
987.08
206,956
0.09
64,482
13,575.16
1,023
0.04
833,123
19,134.63
2,310
0.16
23,316
31.78
74,608
0.08
4,667,651
2,099.36
292,883
Loans
Note I:
Amounts of executed contracts on debt-extinguishment or rescue project that are not reported as nonperforming loans or receivables are disclosed in accordance with the Banking Bureau’s letter dated September 15, 2008 (Ref. No.
09700318940).
Note H: Amounts of executed contracts on negotiated debts that are not reported as nonperforming loans or receivables are disclosed in accordance with the Banking Bureau’s letter dated April 25, 2006 (Ref. No. 09510001270).
Note G: Required by the Banking Bureau’s letter dated July 19, 2005 (Ref. No. 094000494), factoring without recourse is disclosed as nonperforming receivables in three months after the factors or insurance companies reject indemnification
(Credit card receivables and factoring without recourse and their allowance have included nonperforming receivables (included in “other financial assets”)).
Note F: Other loans of consumers banking refer to secured or unsecured consumer banking loans other than housing mortgage, cash card, and small scale credit loans, also exclusive of credit card.
Note E: Small scale credit loans, applied to the Banking Bureau’s letter dated December 19, 2005 (Ref. No. 09440010950), are unsecured loans with small amounts other than credit cards and cash cards.
Note D: Housing mortgage is fully secured by the housing, which is purchased (owned) by the borrower, the spouse or the minor children of the borrowers and the rights on mortgage have been set to the finance institution, for the purpose of
purchasing or decorating housing.
Note C: Coverage ratio of loans: Allowance for loan losses for loans ÷NPL.
Coverage ratio of credit cards receivables: Allowance for loan losses for credit cards receivables ÷ Nonperforming credit cards receivables.
Note B: Ratio of NPL: NPL ÷ Outstanding loan balance.
Ratio of nonperforming credit cards receivables: Nonperforming credit cards receivables ÷ outstanding credit cards receivables balance.
Nonperforming credit cards receivables represent the amounts of nonperforming receivables reported to the authorities and disclosed to the public, as required by the Banking Bureau’s letter dated July 6, 2005 (Ref. No. 0944000378).
Note A: NPL represent the amounts of nonperforming loans reported to the authorities and disclosed to the public, as required by the Regulations which took effect from July 1, 2005.
Items
Credit cards
Without recourse factoring (Note G)
Amounts of executed contracts on negotiated debts not reported as
nonperforming loans (Note H)
Amounts of executed contracts on negotiated debts not reported as
nonperforming receivables (Note H)
Amounts of executed contracts on debt-extinguishment or rescue
project that are not reported as nonperforming loans (Note I)
Amounts of executed contracts on debt-extinguishment or rescue
project that are not reported as nonperforming receivable (Note
I)
Loan
Consumer Banking
Corporate Banking
Items
Secured
Unsecured
Housing mortgage (Note D)
Cash card
Small scale credit loans (Note E)
Secured
Other (Note F)
Unsecured
Period
ASSET QUALITY- NONPERFORMING LOANS AND RECEIVABLES
306
Ta Chong
Bank, Ltd.
Investor
Company
Financial consulting
Life insurance agent
Property insurance agent
Foreign exchange trading,
foreign currency call loans,
swaps and other transactions
under permission of the
foreign exchange business
Futures exchange and futures
settlement institution
Type ɛtelecommunications
industry, information
software services, data
processing services, supply
of electronic information
services, conference room
rental industry, business
management consultancy
industry, leasing industry and
the credit card agency
business
Acquisition of delinquent loans,
business credit services,
investment advisors,
information software
services, data processing
services, supply of electronic
information services, and
advertising services
Hong Kong
Taipei
Taipei
Taipei
Taipei
Taipei
Taipei
Financial Information Service Co., Ltd.
Sunny Asset Management Co.
Kaohsiung
Brokerage, dealing and
underwriting of securities
and futures commission
merchants
Leasing installment sales
Main Businesses and
Products
Kaohsiung
Location
Taiwan Futures Exchange Co., Ltd.
Ta Chong International Finance and
Investment (TCIFI)
Ta Chong Finance (Hong Kong) Limited
Ta Chong General Insurance Agency
Taipei Foreign Exchange Brokerage Co.,
Ltd.
Financial Industry-related
Ta Chong Securities Co., Ltd. (TCSC)
Investee Company
INFORMATION ON INVESTEES
45,500
1,902
1.138
3.148
67,342
83,412
2,648
800
67,342
1,642,664
10,250
$
0.512
100.000
100.000
100.000
0.404
100.000
34.870
$
293
14,333
2,621
(3,234)
54,733
1,082
320
(984)
66,056
Percentage
of
Investment Gain
Ownership Carrying Value
(Loss)
188,846
5,118,750
2,528,863
123,000,000
300,000
300,000
80,000
52,256,000
133,513,572
-
-
-
-
-
-
188,846
5,118,750
2,528,863
123,000,000
300,000
300,000
80,000
52,256,000
133,513,572
3.148
1.138
0.872
100.000
100.000
100.000
0.404
100.000
35.34
Proportionate Share of the Bank and its Affiliates in Investees
(Note A)
Total
Percentage
Pro Forma
Shares
of
Shares
(Note B)
Shares
Ownership
(Continued)
Note
TABLE 4
307
$
200,218
7,252
-
140
2,444
15,996
6,000
$
369
-
(275)
424
-
-
-
20,000,000
2,528,863
-
21,271
326,758
2,138,246
600,000
-
-
-
-
-
20,000,000
2,528,863
b. Derivative contracts, such as stock options, are those conforming to the definition of derivatives in IAS 39.
a. Equity-based securities, such as convertible bonds and warrants, are covered by Article 11 of “Securities and Exchange Law Enforcement Rules.”
-
21,271
326,758
2,138,246
600,000
Pro forma shares are shares that are assumed to be obtained through buying equity-based securities or entering into equity-linked derivative contracts for purposes defined in Article 74 of the Banking Law.
100.000
0.360
-
4.240
4.906
3.017
1.099
Note B:
Futures exchange and
transactions
Venture capital industry
Futures exchange and futures
settlement institution
Meat production, processing
and distribution and
manufacturing and
processing of canned food
and sales
Venture capital industry
Real estate sale, real estate
leasing, investment advisors
and management consulting
service
Information software services,
data processing services,
supply of electronic
information services, and
advertising services
Percentage
of
Investment Gain
Ownership Carrying Value
(Loss)
Shares or pro forma shares held by the Bank, directors, supervisors, president, vice president and affiliates have been included in accordance with the Company Law.
Taipei
Kaohsiung
Taipei
Ta Chong Ventures, Inc.
Taiwan Futures Exchange Co., Ltd.
Taipei
Taipei
Hua Ching Ventures, Inc.
Taiwan Farm Tunna Co., Ltd.
Financial Industry-related
Ta Chong Futures Co., Ltd. (TCFC)
Taipei
Nonfinancial industry-related
Taiwan Farm Industry Co., Ltd.
Location
Taipei
Investee Company
Main Businesses and
Products
Note A:
Ta Chong
! Securities
Investor
Company
100.000
0.872
-
4.254
5.706
3.527
1.099
Proportionate Share of the Bank and its Affiliates in Investees
(Note A)
Total
Percentage
Pro Forma
of
Shares
Shares
(Note B)
Shares
Ownership
(Concluded)
Note
308
Note:
22
22
17
17
Client and proprietary account
1. The foregoing minimum paid-in capital
2. The increase of working capital required by Taiwan Futures Exchange
Restricted working capital on balance sheet of futures department included:
Minimum paid-in capital of futures dealer
Restricted working capital
Futures dealer minimum paid-in capital (December 31, 2013 : 15 branches; December 31,
2012 : 15 branches)
2013
$ 675,000
10,000
$ 685,000
$ 675,000
10,000
$ 685,000
2013
$ 675,000
$ 675,000
December 31
225,000
225,000
2014
$ 400,000
50,000
December 31
$ 400,000
50,000
2014
$99,684
$115,802
$709,617
723%
$720,783
Adjusted net capital
$724,395
$675,000
110%
$370,370
$891,290
$370,405 - $362,255
$724,395
December 31, 2013
Amounts
$675,000
$743,166
Equities
2.76
58.26
%
Capital stock (Note)
$304,615
$841,763
Current assets
Current liabilities
$304,650 - $291,894
$743,166
December 31, 2014
Amounts
Total liabilities minus customers’ equity accounts - futures, futures trading loss
reserve and default reserve
Formula
Equities
Minimum paid-in capital was calculated by:
Rule No.
Requirements of the Rules Governing Futures Commission Merchants:
FINANCIAL RATIOS OF FUTURES COMPANY
Ta Chong Securities, Ltd. - Futures Segment
Requirements of the Rules Governing Futures Commission Merchants
613%
107%
2.41
88.88
%
ʁ20%
ʁ60%
ʁ1
ʁ1
Standard
Complied with the
requirements
Complied with the
requirements
Complied with the
requirements
Complied with the
requirements
Implementation
TABLE 5
309
No.
0
Transaction Company
Ta Chong Bank, Ltd.
From parent company to
subsidiary
subsidiary
subsidiary
subsidiary
subsidiary
subsidiary
Ta Chong Securities, Ltd.
Ta Chong International Finance and Investment
subsidiary
Ta Chong Personal Insurance
subsidiary
subsidiary
subsidiary
subsidiary
subsidiary
Nature of Relationship
subsidiary
subsidiary
subsidiary
subsidiary
subsidiary
subsidiary
Counter-party
BUSINESS RELATIONSHIPS AND SIGNIFICANT TRANSACTIONS AMONG THE PARENT COMPANY AND SUBSIDIARIES
Other revenue
Interest revenue
Discounts and loans
Commissions and fee revenues
Rent expense
Refundable deposits
Interest expenses
Other revenue
Commissions and fee expenses
Rent expense
Interest expense
94,591
360
221
238,900
1,611
10,000
50,000
7
3,121
2,822
30,033
206
48,177
6,268
50,000
200,000
495,000
Content of Transaction
Financial Statement Accounts
Amounts
$ 867,345
Compensation of
key management
personnel
0%-0.17%
1.78%
Short-term loans
Pledge of North
Information
Department
About $833/per
month
0.75%
0%-0.17%
Compensation of
key management
personnel
0%-0.17%
Cash dividend
Determined based
on the balance of
average deposits
0.03%
0%-0.17%
0.81%
0.76%-0.77%
0.77%-0.83%
Trading Terms
0%-0.17
(Continued)
0.02
-
-
0.05
0.02
0.10
0.01
-
-
0.03
0.29
-
0.47
0.06
0.01
0.04
0.10
Transaction
Amount/Total
Consolidated Net
Revenue or Total
Consolidated Assets
(%)
0.02
TABLE 6
No.
Transaction Company
310
subsidiary
subsidiary
subsidiary
subsidiary
subsidiary
subsidiary
subsidiary
Ta Chong Finance (Hong Kong) Limited
Ta Chong Property Insurance
Nature of Relationship
subsidiary
subsidiary
Counter-party
Interest expenses
Interest Expense
Interest expenses
92
42,571
446
4,961
3
2,414
71,592
559,498
Content of Transaction
Financial Statement Accounts
Amounts
Interest expenses
$
191
0%-0.17%
0%-0.17%
50% of insurance
revenue
0.05%-0.85%
0%-0.17%
0%-0.17%
80%-85% of
insurance
revenue
Cash dividend
Trading Terms
0%-0.17%
(Concluded)
-
0.01
-
0.05
-
-
0.70
5.44
Transaction
Amount/Total
Consolidated Net
Revenue or Total
Consolidated Assets
(%)
-
311
4,244,807
53,764,112
29,364,068
3,493,550
265,752
-
9,440,333
53,871,963
3,537,011
122,589
224,940
3,300,463
Off Balance Sheets Items
! ! Commitments and Guarantees
9,913,124
3,474,178
19,634
2,352,044
4,308
28,853
-
9,051,798
57,593,821
31,919,399
3,786,148
190,463
-
2,854,571
17,415
1,231,932
2,716
31,528
-
5,253,731
15,871
3,103,724
1,869
48,772
3,223,779
1,559,215
-
$
Balance Sheets items
! ! Receivable
! ! ! ! Corporate Banking
! ! ! ! Personal credit loans
! ! ! ! Credit Card
! ! ! ! Cash Card
! ! ! ! Residential Mortgage Loans
! ! ! ! Margin Accounts Receivable
! ! ! ! Settlement Receivable
! ! ! ! Others
! ! Discounts and Loans
! ! ! ! Cash Card
! ! ! ! Deposits pledge loans
December 31, 2013
Off Balance Sheets Items
! ! Commitments and Guarantees
5,986,276
12,741
3,183,816
994
53,357
3,897,402
1,494,678
-
11,169,825
59,564,736
3,769,811
91,541
204,660
-
$
Excellent
Balance Sheets items
! ! Receivable
! ! ! ! Credit Card
! ! ! ! Cash Card
! ! ! ! Margin Accounts Receivable
! ! ! ! Settlement Receivable
! ! ! ! Others
! ! Discounts and Loans
! ! ! ! Cash Card
! ! ! ! Deposits pledge loans
! ! ! ! Others
December 31, 2014
Items
$
5,441,047
52,395,064
47,430,082
2,396,207
68,012
-
851,583
16,102
448,729
1,411
44,736
-
2,207,232
64,867,652
46,000,165
2,882,837
46,809
-
993,797
16,402
1,718,657
925
43,789
-
$
-
3,374,424
-
2,550
35,401
1,522,976
-
2,908,540
4,997
2,726
55,813
1,132,079
Non-overdue and Non-impairment Amounts
Good
Acceptable
Others
DISCOUNTS AND LOANS AND RECEIVABLES CREDIT QUALITY ANALYSIS
$
18,654,634
118,973,933
130,666,133
9,426,768
456,353
224,940
9,582,042
51,607
5,939,898
7,588
122,361
3,223,779
1,559,215
1,522,976
15,503,837
136,539,838
137,484,300
10,438,796
328,813
204,660
4,997
9,837,370
46,558
6,190,218
4,635
128,674
3,897,402
1,494,678
1,132,079
Subtotal (A)
$
-
76,193
1,324,362
308,120
23,367
-
384
7,526
131,421
925
4,953
-
-
488,621
1,168,939
211,427
18,366
-
779
5,091
141,919
672
4,012
-
Overdue and
Non-impairment
Amounts (B)
$
89,031
4,633,153
256,644
1,048,661
274,125
-
5,478
4,276
417,207
2,745
765
-
66,284
3,160,841
167,048
947,258
195,430
-
4,866
2,308
371,242
1,909
628
7,795
Impairment
Amounts (C)
$
18,743,665
123,683,279
132,247,119
10,783,549
753,845
224,940
9,587,904
63,409
6,488,526
11,258
128,079
3,223,779
1,559,215
1,522,976
15,570,121
140,189,300
138,820,287
11,597,481
542,609
204,660
4,997
9,843,015
53,957
6,703,379
7,216
133,314
3,897,402
1,494,678
1,139,874
Total
(A)ɠ(B)ɠ(C)
$
34,940
1,036,450
17,700
424,769
92,226
-
156,862
279
17,334
792,932
9,563
371,753
54,596
-
148,232
5,796
$
186,548
1,397,572
469,612
687,762
20,528
-
96,134
44,889
-
155,038
1,547,005
1,420,546
458,894
12,361
1
25,228
43,575
-
Provision Losses (D)
With objective
Without objective
evidence of
evidence of
impairment
impairment
$
18,522,177
121,249,257
131,759,807
9,671,018
641,091
224,940
9,491,770
63,409
6,286,775
11,258
128,079
3,223,779
1,559,215
1,522,697
15,397,749
137,849,363
137,390,178
10,766,834
475,652
204,660
4,996
9,817,787
53,957
6,511,572
7,216
133,314
3,897,402
1,494,678
1,134,078
Net Amounts
(A)ɠ(B
(A)ɠ(B)ɠ(C)ɡ(D)
(B)ɠ(C)
( ɡ(D)
(
TABLE 7
312
Bonds
Equity Investment
NCD
Beneficiary securities
Others financial assets
Equity Investment
December 31, 2013
Bonds
Equity Investment
NCD
Treasury bills
Others financial assets
Equity Investment
December 31, 2014
Items
-
-
-
964,560
96,530
-
902,598
120,672
-
$
$
123,988
299,388
941,589
-
120,319
759,172
-
123,988
26,706,889
1,186,546
66,401,494
105,310
120,319
$ 30,053,123
996,564
52,079,776
163,266
Non-overdue and Non-impairment Amounts
Good
Acceptable
Subtotal(A)
25,504,903
124,285
66,401,494
105,310
-
$ 29,088,563
140,862
52,079,776
163,266
Excellent
SECURITIES INVESTMENTS CREDIT QUALITY ANALYSIS
$
-
-
-
-
Overdue and
Non-impairment
Amounts(B)
$
187,337
-
163,148
-
Impairment
Amounts(C)
311,327
26,706,889
1,186,546
66,401,494
105,310
283,467
$ 30,053,123
996,564
52,079,776
163,266
$
147,709
-
139,330
-
$
163,618
26,706,889
1,186,546
66,401,494
105,310
144,137
30,053,123
996,564
52,079,776
163,266
Total
Provision Losses
Net Amounts
(A)ɠ(B)ɠ(C)
(A)ɠ(B)ɠ(C)ɡ(D)
Amounts(D)
TABLE 8
313
Without objective evidence of impairment
With objective evidence of impairment
Without objective evidence of impairment
With objective evidence of impairment
Items
Items
Individually assessed
Collectively assessed
Individually assessed
IMPAIRMENT ASSESSMENT OF DISCOUNTS AND LOANS AND RECEIVABLE
$
$
2014
12,661
376,088
16,411,671
Total Amounts
December 31
2014
3,160,840
1,309,737
286,888,757
Total Amounts
December 31
$
$
5,757
424,992
15,844,772
2013
2013
4,673,153
1,579,430
261,480,149
Receivables
$
$
Discounts and Loans
Allowance for Credit Losses
December 31
2014
2013
5,796
$
279
148,232
156,862
68,803
141,023
Allowance for Credit Losses
December 31
2014
2013
792,932
$
1,036,450
435,912
534,695
3,438,807
2,575,474
TABLE 9
314
4
17
One director of
TCSC’s board
of director
4
16
Hong Guang
Investment Co.,
Ltd.
Account Volume
$
1,972
125,787
8,000
1,938
132,056
390,000
Maximum
Balance
$
1,572
125,787
8,000
1,476
122,425
-
Ending Balance
$
1,572
125,787
8,000
$
Situations
1,476
122,425
-
Normal
Overdue
-
-
Credit
Real estate
Securities
Credit
Real estate
Certificate of Deposit
Collateral
$
40
629
40
38
1,224
-
Allowance for
Credit losses
balance
None
None
None
None
None
None
Difference of Terms
Of the Transactions
With Non-related
Parties
Note: Provision (Reversal of provision) for credit losses $533 thousand and $(40) thousand for the years ended December 31, 2014 and 2013, respectively; recognized interest revenue was $2,371 thousand and $2,103 thousand for the
years ended December 31, 2014 and 2013, respectively.
Consumer
Loans for house mortgages
Other loans
December 31, 2013
Consumer
Loans for house mortgages
Other loans
December 31, 2014
Category
LOANS INFORMATION OF RELATED PARTY
TABLE 10
Financial
Statements for 2014
Appendix 2 Financial Statements for 2014
316
317
17,314,462
Receivables, net (Notes 4, 5, 10 and 42)
1,883,693
Deferred tax assets (Notes 4, 5 and 35)
The accompanying notes are an integral part of the financial statements.
$461,928,689
78,890
Other assets-miscellaneous (Note 17)
TOTAL ASSETS
319,048
123,305
2,350,713
Intangible assets (Notes 4 and 15)
4,347,721
2,606,182
Property and equipment, net (Notes 4, 5, 14 and 43)
Refundable deposits (Notes 8, 38 and 42)
10,980,948
Other financial assets, net (Notes 4 and 13)
Other non-operating assets, net (Note 16)
1,860,089
Investments accounted for using equity method, net (Notes 4 and 12)
39,381
82,993,326
Available-for-sale financial assets, net (Notes 4,5 and 9)
Prepayments
286,930,583
Discounts and loans, net (Notes 4, 5, 11,42 and 45)
108,915
32,911,268
Financial assets at fair value through profit or loss (Notes 4, 5, 8 and 42)
Current tax assets (Notes 4 and 35)
13,076,641
$ 4,003,524
-
4
7
3
1
30,624
$441,429,667
100
328,187
742,771
102,726
40,913
2,384,453
2,395,292
2,650,334
917,451
1,824,958
94,161,123
263,546,113
153,320
17,003,405
24,484,203
19,692,796
$ 10,970,998
-
4
6
4
2
100
-
-
-
-
-
1
1
1
-
-
21
60
December 31, 2013
Amount
%
-
-
1
-
-
-
1
1
2
-
18
62
December 31, 2014
Amount
%
Due from the Central Bank and call loans to other banks (Notes 4 and 7)
Cash and cash equivalents (Notes 4 and 6)
ASSETS
BALANCE SHEETS
TA CHONG BANK LTD.
TOTAL LIABILITIES AND EQUITY
Total equity
EQUITY
Capital (Note 26)
Common stock
Capital surplus (Notes 4, 26 and 37 )
Retained earnings (Note 26)
Legal reserve
Special reserve
Other equity (Note 26)
Treasury shares (Notes 4 and 26)
Total liabilities
LIABILITIES
Due to the Central Bank and other banks (Note 18)
Financial liabilities at fair value through profit or loss (Notes 4, 5, 8
! and 22)
Derivative financial liabilities for hedging, net (Notes 4, 5 and 22)
Securities sold under agreements to repurchase (Notes 4, 19 and 42)
Payables (Notes 20 and 26)
Current tax liabilities (Notes 4 and 35)
Deposits and remittances (Notes 21 and 42)
Financial debentures (Notes 4, 22 and 26)
Liability component of preferred stocks (Notes 4 and 26)
Other financial liabilities (Notes 23 and 42)
Provisions (Notes 4, 5 and 24)
Deferred tax liabilities (Note 4)
Others (Notes 8 and 25)
LIABILITIES AND STOCKHOLDERS’ EQUITY
December 31, 2014
$461,928,689
32,603,787
1,785,575
24,075
2,965,796
276,037
(348,878)
25,805,739
2,095,443
429,324,902
12,072,919
4,179
15,491,277
5,796,187
23,438
344,565,894
23,414,551
1,635,380
6,957,009
560,782
53,102
747,255
$ 18,002,929
Amount
4
100
7
1
-
6
-
93
3
3
1
75
5
2
-
%
December 31, 2013
$441,429,667
29,521,574
988,680
24,075
3,076,831
171,552
(649,773)
23,897,922
2,012,287
411,908,093
6,597,886
5,449
15,761,107
6,501,217
50,594
342,179,781
15,542,432
1,635,380
2,518,666
555,811
186,112
250,660
$ 20,122,998
Amount
5
100
7
1
-
5
1
93
1
4
1
77
4
1
-
%
TA CHONG BANK LTD.
STATEMENTS OF COMPREHENSIVE INCOME
2014
2013
Amount
%
Amount
INTEREST REVENUE (Notes 4, 28 and 42)
INTEREST EXPENSE (preferred stock interest
expense included was both $130,000 thousand for
the years ended December 31, 2014 and 2013, Notes
4, 24, 28 and 42)
Net interest
REVENUES AND GAINS OTHER THAN
INTEREST, NET
Commission and fee revenues, net (Notes 4, 29 and
42)
Gains from financial assets and liabilities at fair
value through profit or loss (Notes 4, 8 and 42)
Realized gains on available-for-sale financial assets
(Notes 4, 9 and 26)
Foreign exchange gain (loss), net (Notes 4 and 31)
Share of profits of subsidiaries (Notes 4 and 12)
Impairment loss on assets (reversal) (Notes 4, 13 and
17)
Other net gains (losses), net (Notes 4, 13, 17, 24 and
30)
(Note 22)
Net revenues and gains other than interest
%
$ 9,238,027
99
$ 8,629,056
95
4,032,630
43
3,988,165
44
5,205,397
56
4,640,891
51
2,337,653
25
2,220,144
25
1,471,029
16
2,220,413
25
131,933
193,295
117,653
1
2
1
43,332
(193,288)
119,458
10,240
-
(3,596)
-
16,967
-
(2,332)
-
(127,182)
(1)
(2)
1
-
-
4,151,588
44
4,404,131
49
9,356,985
100
9,045,022
100
PROVISION FOR CREDIT LOSSES (Notes 4, 5, 10,
11 and 42)
479,422
5
720,787
8
OPERATING EXPENSES (Notes 4, 5, 14, 15, 16, 24,
32, 33, 34 and 42)
Depreciation and amortization
Other general and administrative expenses
3,349,969
334,320
2,079,592
36
4
22
3,118,347
318,154
1,883,194
34
4
21
5,763,881
62
5,319,695
59
3,113,682
33
3,004,540
33
TOTAL NET REVENUE
Total operating expenses
PROFIT BEFORE INCOME TAX
(Continued)
318
TA CHONG BANK LTD.
STATEMENTS OF COMPREHENSIVE INCOME
2014
2013
Amount
%
Amount
INCOME TAX EXPENSE (Notes 4, 5 and 35)
$
NET PROFIT FOR THE YEAR
(478,587)
2,635,095
OTHER COMPREHENSIVE INCOME (Notes 4, 12,
26 and 35)
Exchange differences on translating foreign
operations
Unrealized gain on available-for-sale financial assets
Cash flow hedges
Actuarial loss on defined benefit plans
Share of the other comprehensive income of
subsidiaries
Income tax relating to the components of other
comprehensive income
(5)
$
28
(348,225)
2,656,315
%
(4)
29
54,139
61,346
1,270
(51,044)
1
1
(1)
35,343
64,581
2,601
(31,524)
1
-
(1,880)
-
6,825
-
(764)
-
1,015
-
63,067
1
78,841
1
TOTAL COMPREHENSIVE INCOME FOR THE
YEAR
$ 2,698,162
29
$ 2,735,156
30
EARNINGS PER SHARE
Basic (Note 36)
Diluted (Note 36)
$
$
Other comprehensive income for the period, net
of income tax
1.04
0.89
$
$
1.06
0.86
(Concluded)
319
320
70,871
$ 2,024,572
-
-
43,724
-
-
74
-
1,980,774
-
-
108
49,964
-
-
-
$ 1,930,702
-
-
-
-
-
796,895
-
988,680
-
-
-
-
519,378
-
469,302
$ 1,785,575
$
Legal Reserve
$
$
24,075
-
-
-
-
-
-
24,075
-
-
-
-
(342,763)
366,838
Special Reserve
Retained Earnings
$ 2,965,796
2,593,677
(41,418)
2,635,095
-
-
(796,895)
(1,887,229)
(20,588)
3,076,831
2,633,071
(23,244)
2,656,315
-
(519,378)
(1,420,188)
342,763
$ 2,040,563
Undistributed
Earnings
$
$
19,431
44,914
44,914
-
-
-
-
(25,483)
31,442
31,442
-
-
-
(56,925)
Exchange
Differences on
Translating
Foreign
Operations
Other Equity
$
$
Note B: The statements of comprehensive income had excluded the amount of remuneration to Directors and Supervisors $36,000 thousand and Bonus to employees $22,500 thousand.
260,075
58,518
58,518
-
-
-
-
201,557
68,484
68,484
-
-
-
133,073
Unrealized Gain
on Available-for
-sale Financial
Assets
Note A: The statements of comprehensive income had excluded the amount of remuneration to Directors and Supervisors $24,000 thousand and Bonus to employees $15,000 thousand.
$ 25,805,739
-
Total comprehensive income (loss) for the year ended
December 31, 2014
-
-
4,605
34,753
-
-
-
-
1,887,229
20,588
-
31,513
23,897,922
$
-
-
25,856
-
-
-
4,721
-
936
-
$
1,420,188
-
$ 22,477,734
Capital Surplus
Treasury Stock
Transactions
Others
Appropriation of 2013 earnings (Note B below)
Legal reserve
Stock dividends of preferred stock - $0.11 per share
Change in capital surplus from investments in subsidiaries
accounted for using equity method
Loss on purchase of Bank's shares held by subsidiaries
Total comprehensive income for the year ended
December 31, 2013
BALANCE AT JANUARY 1, 2013
Appropriation of 2012 earnings (Note A below)
Legal reserve
Excess of the consideration paid over the carrying amount of
the subsidiaries' net assets
Common Stock
Capital
STATEMENTS OF CHANGES IN EQUITY
(In Thousands of New Taiwan Dollars, Except Dividends Per Share)
TA CHONG BANK LTD.
$
$
(3,469)
1,053
1,053
-
-
-
-
(4,522)
2,159
2,159
-
-
-
(6,681)
Cash Flow
Hedges
$
$
(348,878)
-
-
16,568
288,304
-
(3,977)
-
-
(649,773)
-
-
144,309
-
21,207
-
(815,289)
Treasury
Shares
Total Equity
$ 32,603,787
2,698,162
63,067
21,173
366,781
2,635,095
(3,977)
74
-
29,521,574
2,735,156
78,841
108
220,129
2,656,315
25,928
-
$ 26,540,253
TA CHONG BANK LTD.
STATEMENTS OF CASH FLOWS
2014
2013
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before income tax
Adjustments for
Depreciation expenses
Amortization expenses
Net gain on financial assets and liabilities at fair value through profit
or loss
Interest expenses
Interest revenues
Dividend income
Provision for loss on guarantees
Net changes in other provisions
Compensation cost of employee share option
Share of the profit of subsidiaries
Loss (gain) on disposal of properties and equipment
Loss on disposal of other assets
Gain on disposal of investments
Impairment loss recognized on financial assets
(Reversal of) impairment loss recognized on non-financial assets
Unrealized foreign exchange losses
Gains on disposal of collaterals assumed
Others
Net changes in operating assets and liabilities
Financial assets at fair value through profit or loss
Receivables
Discounts and loans
Other assets
Due to the Central Bank and call loans to other banks
Financial liabilities at fair value through profit or loss
Payables
Provisions
Other liabilities
Interest received
Dividends received
Interest paid
$
3,113,682
57,805
276,515
524,520
$
3,004,540
71,728
246,426
717,722
(476,323)
4,032,630
(9,238,027)
(57,474)
(45,098)
37,294
43,724
(117,653)
143
1,613
(132,617)
(10,240)
549,286
127,182
(51,923)
67
(1,234,881)
3,988,165
(8,629,056)
(51,539)
3,065
76,672
49,964
(119,458)
(42,137)
3,986
(9,452)
188
3,408
(9,071)
-
7,139,420
(4,701,911)
(982,465)
(23,796,895)
1,532
(2,120,069)
1,075,138
(472,207)
2,386,113
(37,961)
755,935
(5,875,064)
(4,959,938)
(1,351,967)
13,753,416
(9,384)
(1,657,198)
73,929
645,273
(2,239,324)
(35,176)
86,955
9,531,082
8,546,964
141,109
88,387
(3,937,360)
(4,136,751)
(Continued)
321
TA CHONG BANK LTD.
2014
2013
Income tax paid
$
Net cash generated from (used in) operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of available-for-sale financial assets
Proceeds from disposal of available-for-sale financial assets
Purchase of debt investments with no active market
Purchase of financial assets measured at cost
Proceeds from disposal of financial assets measured at cost
Payments for properties and equipment
Proceeds from disposal of property and equipment
Increase in refundable deposits
Payments for intangible assets
Proceeds from disposal of collaterals assumed
Increase in miscellaneous assets
Proceeds from disposal of other deferred assets
Dividends received
(94,352)
(16,477,785)
(781,992,213)
793,360,205
(10,058,228)
(6,000)
1,415
(137,936)
35
(3,604,950)
(64,169)
62,163
(105,502)
456
17,990
Net cash generated from (used in) investing activities
(2,526,734)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of financial debentures
Repayments of financial debentures
Increase in securities sold under agreements to repurchase
Decrease in securities sold under agreements to repurchase
Increase in other financial liabilities
Employee buy-back of treasury shares
Acquisition of non-controlling interest in subsidiaries
15,516,100
(7,500,000)
540,353,674
(540,927,825)
4,438,343
323,057
-
Net cash generated from (used in) financing activities
EFFECT OF EXCHANGE RATE CHANGES ON THE BALANCE OF
CASH HELD IN FOREIGN CURRENCIES
$
(123,513)
876,879
(890,638,336)
895,801,820
(839,688)
(154,335)
90,883
(78,318)
(37,864)
19,110
108
(90,943)
17,550
4,089,987
608,369,125
(609,737,522)
537,330
170,165
(110)
12,203,349
(661,012)
356,961
(82,581)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS
(6,444,209)
4,223,273
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE
YEAR
11,808,898
7,585,625
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
322
$
5,364,689
$ 11,808,898
(Continued)
TA CHONG BANK LTD.
Reconciliation of the amounts in the statements of cash flows with the equivalent items reported in the balance
sheets at December 31, 2014 and 2013:
2014
2013
Cash and cash equivalents in balance sheets
Due from the Central Bank and call loans to other banks in accordance
with cash and cash equivalents under IAS 7
$
Cash and cash equivalents in the statements of cash flows
$
4,003,524
$ 10,970,998
1,361,165
837,900
5,364,689
$ 11,808,898
(Concluded)
323

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