China has approved applications from four Taiwanese banks to set up branches there after the two sides agreed in June to grant market access to each other’s banking sectors under the Economic Cooperation Framework Agreement (ECFA), the Financial Supervisory Commission (FSC) said yesterday.
“We just learned that China approved the first batch of four domestic banks’ applications to open branches,” FSC Chairman Chen Yuh-chang (陳裕璋) told a media briefing.
The four lenders are Land Bank of Taiwan (土地銀行), Chang Hwa Commercial Bank (彰化銀行), First Commercial Bank (第一銀行) and Taiwan Cooperative Bank (合庫銀行).
The four lenders may start to conduct Chinese yuan business one year after proving profitable, Chen said. Local banks have pressed for greater cross-strait banking deregulation, noting that a branch can only take deposits of more than 1 million yuan (US$148,699), among other limitations.
The commission did not comment on the application by the Bank of China (中國銀行) and Bank of Communications (交通銀行) to open representative offices in Taiwan.
So far, more Taiwanese banks have expressed interest in cross-strait expansion because the playing field here is crowded and fragmented.
The commission yesterday gave the go-ahead to Chinatrust Financial Holding Co’s (中信金控) application to open a branch in Shanghai, bringing the total number of applicants to seven.
Cathay United Bank (國泰世華銀行), a subsidiary of Cathay Financial Holding Co (國泰金控), and Hua Nan Commercial Bank (華南銀行), the banking arm of Hua Nan Financial Holdings Co (華南金控), also have gained the commission’s approval for their expansion plans in China.
In related developments, Chen said the commission expected US insurance giant American International Group Inc (AIG) to respond positively to the commission’s suggestion that it keep operating its Taiwanese unit, Nan Shan Life Insurance Co (南山人壽), reiterating that the commission would help protect the rights and benefits of Nan Shan employees and customers if asked to do so.
The commission on Aug. 31 rejected AIG’s plan to sell Nan Shan to Hong Kong buyers — China Strategic Holdings Ltd (中策集團) and Primus Financial Holdings Ltd (博智金融) — on grounds that the consortium lacked the funding for future capital increases or the long-term commitment to operate Nan Shan.
Also yesterday, Taishin Financial Holding Co (台新金控) said its banking unit, Taishin International Bank (台新銀行), signed a memorandum of understanding with the Bank of Nanjing (南京銀行) to develop professional capabilities and exchange industry research. The bank earlier expressed strong interest in tapping into the Chinese market, but preferred a cautious approach.