Taiwanese banks could better tap into the Chinese market if Beijing were to waive the statutory three-year grace period and allow Taiwanese banks immediate access to yuan-related business, pundits said yesterday.
“The nation’s financial regulator has promised [to negotiate with its Chinese counterpart] to ease the grace period before Taiwanese banks are allowed to operate yuan-denominated business,” Wang Lee-rong (王儷容), director of the Chung-Hua Institution for Economic Research’s (中經院) Center for Economic Forecasting, told a seminar organized by the National Policy Foundation and Taiwan Competitiveness Forum.
This could help Taiwanese banks, which are already at a disadvantage given their late entry into the market, Wang said.
Should the three-year grace period be completely scrapped, “Taiwanese banks will greatly benefit and could grow into banking giants in China,” Hwang Dar-yeh (黃達業), a finance professor at National Taiwan University, said at the seminar.
Hwang agreed with Wang that the government should talk to Chinese authorities about raising the 20 percent ceiling on Taiwanese shareholding in Chinese commercial banks to 50 percent in special economic districts such as Tianjin City and Sichuan Province.
However, Chang Chun-shyoung (張春雄), a finance professor at Shih Chien University, expressed concern over granting reciprocal treatment to Chinese banks.
The entry of Chinese banks, some of which are much bigger than their Taiwanese counterparts, could pose a big challenge to an already overcrowded market, Chang said.
During his keynote speech, Vice Premier Paul Chiu (邱正雄) said that Taiwanese banks had the upper hand in developing corporate and consumer banking, laying a solid foundation for branching out into China and leveraging off a potential clientele of 50,000 China-based Taiwanese businesses there.
Chiu said that officials from both sides of the Strait are scheduled to meet next month to engage in negotiations on cross-strait financial cooperation as well as sign a financial memorandum of understanding before opening up their markets to each other.
If such an agreement were inked, it would usher in a new era in cross-strait financial exchanges, he said.