Taiwan and China yesterday made a significant breakthrough in easing market access rules for banks seeking to own stakes in peers or expand their presence across the Taiwan Strait.
A consensus was reached after a closed-door meeting in Taipei between Financial Supervisory Commission (FSC) Chairman Chen Yuh-chang (陳裕璋) and China Banking Regulatory Commission (CBRC) chairman Shang Fulin (尚福林).
The new rules, if approved, will allow individual Chinese lenders to own up to 10 percent of listed financial holding companies in Taiwan, from the current 5 percent, Banking Bureau Director-General Kuei Hsien-nung (桂先農) said.
The stake may not exceed 15 percent once shares obtained through the open market by Chinese institutional investors are also factored in, compared with the present cap of 10 percent, Kuei said.
The limit for Taiwanese unlisted financial holding companies and banks is set at 15 percent and at 20 percent for banking subsidiaries of financial holding firms, he said.
“Chinese investors may choose to invest in financial holding companies or banking units, but not both,” Kuei told reporters on behalf of the FSC.
The investment easing measures still need to undergo legal review and be approved by authorities on both sides. If they pass, they would allow Chinese lenders to forge partnerships with Taiwanese banks, said Fan Wenzhong (范文仲), head of the international department at the Chinese banking commission.
In addition, Taiwan and China agreed to lift the requirement that banks must have five years of prior operational experience in advanced economies to qualify to set up branches in bilateral markets, Kuei said.
Chinese banks with branches in Taiwan would be allowed apply to set up new branches and conduct offshore banking, Kuei said, adding that China UnionPay Co (中國銀聯), China’s only credit card network, would also be allowed also file an application to establish a branch here.
Chinese banking regulators also pledged to speed up their review of plans by Taiwanese lenders to open new branches or outlets in China, Fan said.
Taiwanese lenders would also be allowed to apply to set up branches in Chinese towns and villages, and enjoy more favorable terms for expansion in designated areas, Fan said, adding that these terms are not available for other foreign banks.
Beijing also agreed to work out a mechanism to allow yuan to flow back to China more easily, Fan said.
Meanwhile, Minister of Finance Chang Sheng-ford (張盛和) said yesterday that Taiwan’s state-owned banks will not sell their shares to Chinese banks.
He added that state-owned local banks are not interested in buying shares of Chinese banks.
However, Chang said the ministry could not rule out that Chinese banks might buy shares in the state-owned Chang Hwa Commercial Bank (彰化銀行) through the stock market, which raised concerns from lawmakers in the Finance Committee yesterday that Chinese banks may grab management rights of government-run banks in Taiwan.