Foreigners permitted to take secured loans

Foreigners, regardless of their residential status, will be able to take secured loans from local financial institutions by the middle of next month at the earliest, the Bankers Association of the ROC (銀行公會) said yesterday.

Consensus

"After canvassing opinions from member banks on this issue, the association's board of directors will finalize the regulations for banks to follow in its monthly meeting next month," said Elton Li (李蔭棠), chief of the association's consulting services center, during a telephone interview.

Li made the comments after the central bank on Monday night announced that restrictions on lending to foreigners, including people without alien resident certificates and institutional investors, would be lifted to stimulate domestic investment and activate the capital market.

George Chou (周阿定), director-general of the central bank's currency department, estimated that financing to non-Taiwanese would likely top US$40 billion and the new regulation would benefit foreigners' investments in stocks, bonds and real estate.

Among the US$130 billion in foreign capital currently invested in the local stock market, two-thirds comes from retirement and mutual funds, which are not allowed to take out loans from local banks. The other third, hailing from securities firms, hedge funds and private equity, would be potential clients for New Taiwan dollar financing, Chou said.

Wide-ranging

The central bank has also ordered credit cooperatives, fishermen and farmers' funds to follow suit, the statement said.

Tsai Hsian-chung (蔡憲宗), executive vice president of the state-controlled First Financial Holding Co (第一金控), said the new rule would allow foreign institutional investors to step up investment in Taiwan, boosting the stock and housing markets. But granting loans to individuals would be more difficult in light of greater risk.