Domestic banks may offer yuan-based products and services onshore without prior regulatory approval once the central bank settles technical details with China’s appointed clearing agency, the Financial Supervisory Commission (FSC) said yesterday.
The deregulation came as Taiwan vies with Singapore and Sydney to become another regional yuan-trading hub, after Hong Kong.
The operations, currently restricted to corporate customers via offshore banking units, may become available at domestic banking units for individual clients who wish to own yuan-denominated assets by the Lunar New Year in February, said Jean Chiu (邱淑貞), deputy director-general of the FSC’s banking bureau.
“There is no need for regulatory approval beforehand as banks can simply include yuan in their foreign-currency product lines,” Chiu said by telephone.
The commission has made known its stance on the matter in a letter to the Bankers Association of the Republic of China (銀行公會) on Thursday, allowing domestic lenders to start preparations straight away, Chiu added.
The new business is expected to be a key earnings driver for a banking sector that is struggling to grow profits amid excessive competition and low interest rates over recent years.
Yuan deposits may account for 15 percent of total deposits in Taiwan in five years and 30 percent in 10 years, or 2.5 trillion yuan (US$398.79 billion) in terms of value, the local unit of Standard Chartered Bank forecast last month.
More than 40 percent of Taiwanese have expressed interest in owning yuan deposits, suggesting 4.4 million potential customers based on a population of 11 million aged between 30 and 60 years old, the British banking group said.
Tiew Siew-chuen (張秀娟), the newly installed head of consumer banking at Standard Chartered, said the lender would offer interest rates of more than 3 percent for yuan time-deposits to win customers.
First Commercial Bank (第一銀行), the banking arm of First Financial Holding Co (第一金控), told Chinese-language Economic Daily News yesterday it would set interest rates at 3.25 percent for one-year-term yuan deposits in excess of five million yuan.
Taiwan Business Bank (台灣企銀), another state-run lender, said it would offer interest rates of 3.2 percent for yuan deposits larger than 600,000 yuan.
To curb vicious competition, the FSC said it would demand explanations from lenders that adopt unreasonable pricing strategies.
“The commission will not sit by when banks offer interest rates that are not sustainable or reasonable,” Chiu said.
Under Article 61 of the Banking Act (銀行法), the commission is authorized to penalize banks that do not operate on a stable basis and it could determine whether a bank has disrupted the domestic market order with its interest rate offer on a case-by-case basis.
Lenders may start to provide yuan-based deposits, lending, remittance, trade settlements, trade financing, wealth management products and services after the central bank settles currency-clearing details with the Taipei branch of Bank of China Ltd (中國銀行), Chiu said.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to