The Financial Supervisory Commission yesterday said that it had agreed to allow local lenders to help corporate clients open bank accounts in their overseas branches, saving businesses the trouble of traveling abroad.
Starting immediately, the regulatory easing is intended to help boost the competitiveness of domestic banking institutions so that they may better serve clients in need of such services, the commission said in a statement.
However, the deregulation is limited to corporate clients and banks must not lower their guard on risk control, the commission added.
RETURN OF NDFs
Separately, beginning today, local lenders can start applying to the commission to resume the trade of non-deliverable forwards (NDF) at their offshore banking units, which might benefit local banks by adding a new source of revenue.
The central bank yesterday said that as the NDFs have become a popular instrument for companies to hedge their exposure to foreign exchange markets, the central bank has considered re-enabling offshore units to provide the service.
NO VOLATILITY THREAT?
The central bank unexpectedly suspended NDF trading of the New Taiwan (NT) dollar in 1998 after the Asian financial crisis due to concerns that NDFs would lead to high exchange-rate volatility and have a potential impact on the local currency’s movement.
Previously, only foreign banks were allowed to do NDF business for foreign corporate clients. Local banks have expected the rule change to help them boost their service charges and profitability, the bank added.
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