Thu, Aug 23, 2001 - Page 17 News List

Official talks with China's central bank

FINANCE Local Chinese-language media are in abuzz over the possibility of Beijing easing rules for Taiwan bank branches, but there may be a catch


Vice Minister of Finance Sean Chen (陳沖) said yesterday that monetary institutions in Taiwan, Hong Kong and Macao are defined in Beijing's regulatory provisions for foreign monetary institutions as "foreign."

Chen was referring to a report from Beijing that Shi Jiliang (史紀良), deputy governor of the People's Bank of China, spoke ambiguously Tuesday about the status of Taiwan banks' representative offices in China.

The news follows a trip by one of Taiwan's top banking regulators who visited his counterparts in Beijing, amid reports China may ease access to its market for Taiwan lenders.

Bureau of Monetary Affairs Deputy Director General Tsai Ching-nain (蔡慶年) and several local bank executives visited the People's Bank of China in a "private capacity," a finance ministry official said. Shi attended the meeting, announcing plans to waive some requirements for Taiwan banks seeking to establish branches in China, local Chinese-language newspapers reported earlier, citing Shi.

China, which incorrectly claims Taiwan is part of its territory, will require Taiwan banks seeking to open mainland branches to accept its ``one China'' policy, a Taiwanese paper said.

Taipei refuses to embrace such a policy, seeing it as a political trap.

"Beijing is turning up the heat to force Taiwan to bow to its one China policy by offering incentives to Taiwanese businesses, laced with conditions," said Lin Tsui-pin (林翠萍), a manager at Prudential Securities Investment Trust Co (保誠投信), which manages NT$45 billion (US$1.3 billion) in Taiwan.

China's huge market offers vast potential for Taiwan's banks, strapped for lending opportunities at home as a result of the slumping domestic economy here.

Banks also want mainland representation so they can service Taiwan businesses that move operations to China.

The Land Bank of Taiwan (土地銀行) will apply to open a representative office in China, bank President Lin Peng-lang said yesterday. Taiwan's United World Chinese Commercial Bank (世華銀行) and First Commercial Bank (第一銀行) have already applied to local authorities to open a representative office in China.

Shi's reported offer comes as Taiwan has promised to relax investment regulations.

"China has always maintained an open policy towards Taiwan's banks and financial services firms that want to establish branches on the mainland," said Wei Gejun, a senior spokesman at the People's Bank of China in Beijing.

"Taiwanese banks are treated the same way as those from Hong Kong and Macao."

To woo Taiwan banks, China plans to waive requirements for full-branch status, such as holding a minimum US$20 billion in total assets and running a representative office for two years, Chinese-language media reported.

Under the proposal, Taiwan banks will also be allowed to take deposits and offer loans denominated in yuan, local media said, but Taiwanese banks must accept Beijing's one China principle and applications must be made before China enters the WTO to qualify, local media said.

Taipei does not yet permit local banks to seek full branch status in China, fearing that an increased reliance on the mainland economy will make Taiwan more vulnerable to its rival if relations deteriorate further.

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