United World Bank opens new office

United World Chinese Commercial Bank (世華銀行), Taiwan's eighth-largest publicly traded lender by assets, will open an office in Shanghai today -- the second Taiwanese lender this month to expand in China.

United World, formed in 1975, will open its first China representative office in Shanghai's Pudong financial district, near the city's stock exchange. United World Chairman Gregory Wang Kuo-Hua (汪國華), President Tung Cheng-Cheng (董成城) and Chung Jih-ti (鍾日迪), the chief Shanghai representative, will attend the opening, the bank said in an invitation card for the ceremony.

United World joins half a dozen Taiwanese rivals, including Hua Nan Commercial Bank (華南銀行) and First Commercial Bank Ltd (第一銀行), in trying to tap China's 7 percent economic growth and nearly 8 trillion yuan (US$966 billion) of household savings.

"It's a symbolic step that won't have any immediate impact on the bank's earnings or business," said Jesse Wang, an analyst at ABN Amro Securities Ltd in Taipei, who has a "reduce" recommendation on United World shares. "United World can't conduct lending or deposit business until after two years, and can only apply for a license to lend yuan currency after five years." Taiwan's economy is struggling to emerge from its worst recession on record, forcing companies to look outside the island to expand business.

Chang Hwa Commercial Bank (彰化銀行), Taiwan's second-oldest lender, last week opened a representative office in Kunshan, 50km from Shanghai, and home to 1,200 Taiwanese companies.

China has no diplomatic links with Taiwan. Still, that hasn't deterred an expansion of financial and trading links.

China last year imported US$24 billion of goods from Taiwan, shipping them through Hong Kong. Many Taiwan companies are relocating factories to China, which is handing out licenses to foreign banks under commitments to open its financial industry to foreigners.

The licenses give the banks the ability to monitor client businesses in China, making it easier to assess loan requests.

Chinatrust Commercial Bank (中國信託銀行), Land Bank of Taiwan (土地銀行), Taiwan Cooperative Bank (合作金庫) and International Commercial Bank of China (中國商銀) are other lenders that have asked to open offices to serve Taiwanese companies in China, which took a record 20 percent of Taiwan's exports last year.

"This signals progress in financial cooperation across the Taiwan Strait," China's central bank Governor Dai Xianglong (戴相龍) said at a March 11 press conference, where he announced the new licenses for Chang Hwa and United World. "I also support our banks going to Taiwan."

Taiwan banks can apply to upgrade their China representative offices into full branches two years later, under the Chinese central bank's rules, to be able to take deposits and give loans.