United World Chinese Commercial Bank (世華商銀) and Chang Hwa Bank (彰化銀行) won approval from China's central bank to open offices in China, local media reported yesterday.
United World will open an office in Shanghai, said Andrew Tsai (蔡清雲), senior vice president of United World.
"Thus far we haven't seen the official document yet," Tsai said. "But we expect to receive it within the next two weeks."
Initially, United World plans to send five staff members to China and will use this first office to gather business information and develop correspondence channels, Tsai said.
Chang Hwa will take a different approach by setting up its first China-based office in Kunshan, where many Taiwan companies have factories, the bank's Executive Vice President Hsieh Chao-nan (
Besides collecting business information, Chang Hwa will use the Kunshan office to monitor its clients' businesses there, Hsieh said.
Foreign banks must have a representative office in China for three years before they can apply for a banking license. To date, eight Taiwanese banks have applied to open offices in China. These are United World, Chang Hwa, the Land Bank of Taiwan (
"This signals progress in financial cooperation across the Taiwan Strait," People's Bank of China Governor Dai Xianglong (戴相龍) said during a news conference held by the fifth convention of the National People's Congress currently underway in Beijing. "I also support our banks going to Taiwan."
While United World's Tsai said the bank also plans to set up its second mainland office in Beijing, establishing representative offices is seen as just the first step toward the real goal of most of these banks -- building branches in China. "It's just the first step. The market is there and we knew the demand is growing," he said.
In return, Taiwan may allow Chinese banks such as Shanghai Pudong Development Bank Co (上海浦東發展銀行) to open offices in Taipei, as links between the two economies expand, even though they remain at political loggerheads.
Taiwan is concerned that an exodus of its companies to China may worsen the nation's record unemployment rate and prolong its recession.
Taiwan banks have to catch up with foreign lenders already operating branches and representative offices in the world's most populous nation.
China had 190 licensed foreign banks at the end of September, operating branches and representative offices with a combined total of US$44 billion in assets, US$18.6 billion in loans and US$6.5 billion of foreign currency deposits, according to figures released by China's central bank.