The Financial Supervisory Commission (FSC) yesterday announced plans to allow local units of foreign banks to conduct securities business, among other regulatory easing, in a bid to help boost their revenues and the state coffers.
The commission made the statements after a closed-door meeting between FSC Chairman William Tseng (曾銘宗) and top executives from the local units of foreign banks.
“Financial institutes may buy and sell bonds and securities on behalf of customers so they can strengthen their product lines and services,” the commission said in a press statement released after the meeting.
The planned opening would give banks more flexibility to allocate assets and build bond holdings to generate fixed income, the commission’s Securities and Futures Bureau said, adding that this service is limited to institutional clients.
Banks that want to engage in the securities business must set up securities divisions and meet capital and regulatory requirements just as securities houses do, a bureau official said by telephone.
Financial institutes found to have violated regulations or with loose internal oversight will be rejected even if they meet financial and professional qualifications, said the official, who declined to be named, after some people voiced confusion about the commission’s criteria.
At present, lenders interested in securities brokerage have to give up either underwriting or proprietary business.
The planned liberalization would further blur the lines of business between brokerages, banks, asset managers and life insurers, allowing them to better serve customers, but deepening the need for differentiation to stay competitive.
The commission also promised participants at the meeting that it would talk with the Ministry of Finance on the desirability of lowering taxes on foreign players who invest in Formosa bonds.
The government now places a 15 percent levy on foreign investors and 10 percent on domestic participants in their issuance of the offshore Chinese yuan-based bonds.
As for foreign banks’ intention to have a higher business exposure to China, the commission said it would give favorable consideration to the matter.
Tseng, who was appointed chairman last month by Premier Jiang Yi-huah (江宜樺), has met with representatives from domestic and foreign banking institutes over the past few weeks.
His appointment has been taken positively by the market on expectations of a more proactive push on reform, which his predecessor Chen Yuh-chang (陳裕璋) had failed to complete.