FSC may ease rules on banks' China investment

The government is mulling whether to allow the nation's banks to directly or indirectly invest in Chinese rivals, or to let them set up subsidiaries in China and permit Chinese banks to enter the local market as a supporting measure, the Financial Supervisory Com-mission's acting chairman Lu Daung-yen (呂東英) said yesterday.

Lu said this was a confirmed policy direction, but stressed that the timing for implementation of this policy needed to be discussed in the Economic Sustainable Development Conference next month.

At the conference on July 27 and 28, the government will review its opening-up policy and may include the reciprocal approval of Chinese banks to establish footholds in Taiwan's financial market, the commission's vice chairperson Susan Chang (張秀蓮) said.

The local banking industry has long called on the regulator to further ease cross-strait regulations to facilitate Taiwanese banks' expansion into the fast-growing Chinese market.

Seven out of 10 banks that had been allowed to set up representative offices in China are restricted from upgrading them to branches by Beijing, as Taipei bars Chinese banks from tapping into the local market.

Currently, local banks' direct or indirect investment via a third area in a Chinese bank is subject to the restrictions listed under the Statute Governing Relations between Peoples of the Taiwan Area and the Mainland Area (兩岸人民關係條例).

Lu added that the commission would continue to encourage overseas Taiwanese companies to make their initial public offerings (IPOs) back home.

"We will continue to promote the plan, even if it's not under the name [of a proposed] `offshore bourse,' but something like an international capital market," he added.

The foreign currency-denominated offshore bourse is deemed as one of the significant policies promoted by suspended commission chairman Kong Jaw-sheng (龔照勝).

The bourse was meant to attract China-based Taiwanese firms to launch their IPOs in Taiwan, but was frozen due to legal obstacles.

Lu made the remarks during the commission's two-year anniversary press conference.

In related news, the Cabinet announced last night that Lu had been appointed to continue serving as the acting chairperson of the Financial Supervisory Commission until August.