Minister welcomes China's move

Minister of Finance Lee Yung-san (李庸三) yesterday welcomed China's goodwill gesture of opening cross-strait capital transfers through offshore banking units (OBU).

While the move does not allow the direct movement of money between banks on the two sides of the Strait, it does speed up the electronic process by standardizing the transfers between OBUs and eliminate intermediaries.

"Now that [Beijing's] People's Bank of China (中國人民銀行) has given its approval, [Taiwanese] banks will soon be allowed to conduct [direct SWIFT] transactions across the Strait," Lee told reporters yesterday after an awards ceremony at the ministry.

SWIFT, the Society For Worldwide Interbank Financial Telecommunications, is a non-profit, cooperative organization that was created in 1973 to facilitate the exchange of payment messages around the world.

The OBUs of 15 large-scale Taiwanese and 12 foreign banks in Taiwan have been granted finance ministry approval to conduct direct transactions with mainland banks since March.

After five months of evaluation, China finally gave the go-ahead last Friday, allowing OBUs of its major banks -- including the People's Bank of China, the Commercial Bank of China (中國工商銀行), the China Construction Bank (中國建設銀行), the Agricultural Bank of China (中國農業銀行) and the Bank of China (中國銀行) -- to conduct transactions with their Taiwanese counterparts.

More Taiwanese banks may soon be approved after submitting applications to the ministry, Lee said.

The 15 Taiwanese banks include Taiwan Cooperative Bank (合作金庫), Chang Hwa Bank (彰化銀行), Hua Nan Commercial Bank (華南銀行), Chinatrust Commercial Bank (中信銀) and First Commercial Bank (第一銀行).

Domestic banks said that they had started accepting transactions yesterday -- the first trading day.

However, an official at Taiwan Cooperative, who preferred not to be identified, told the Taipei Times yesterday that no transactions had actually taken place since "some technical problems have yet to be worked out between banks across the Strait."

He added: "Taiwan's banking sector is far ahead of China by roughly two decades. [China's] network may not be extensive enough to provide the best service to Taiwanese doing business in China."

But in terms of cost and time, OBU transactions will certainly be a lot more efficient, he said.

Bankers reacted optimistically to the news yesterday, saying the opening will provide significant cost savings.

Chang Hwa president Mike Chang (張嵩峨) said yesterday, "The expected turnovers are beyond estimation."

Chinatrust estimated that Taiwanese business people can save at least US$50 million per year in business costs, based on an estimated US$35 billion per year in cross-strait trade.

The bank added that, before yesterday, cross-strait money transfers via a third foreign bank cost an extra US$100 per transaction and took three working days to process.

Via SWIFT, the transaction time can be cut to one day.

Local Chinese-language media also reported yesterday that China may allow two or three Taiwanese banks to set up liaison offices there in late July or early August.

Chang Hwa and United World Chinese Commercial Bank (世華銀行) have already opened liaison offices, which will obtain branch status in three years, while six other banks are still awaiting approval from China.

When asked whether Chinese banks can also open here, Lee said yesterday that his ministry would have to propose relaxing legal restrictions first.