Fri, Jun 01, 2001 page17

• Removal of ban lauded by analysts

  FINANCE Observers say the government's recent move to allow banks to establish representative offices in China is a big positive for the industry

  • By Tsering Namgyal / STAFF REPORTER
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  The government's decision to allow local banks to set up representative offices in China, analysts said, underscores its commitment to ease its "No haste, be patient" (戒急用忍) policy as the two sides prepare for their pending entry into the WTO.

  "From a political point of view, the ongoing banking interaction demonstrates that Taiwan considers China to be a very important market," said Craig Chen, an economist who covers Taiwan for ING Barings Securities.

  "In the long-run, indirect trading links will also have to go as it does not make sense for goods to continuel travelling through Hong Kong."

  The government has announced that for banks to be eligible, they must be ranked among the top 10 banks in Taiwan, in terms of assets and net value, with a capital adequacy ratio of at least 8 percent, and they must have international banking experience. According to the Ministry of Finance, only nine banks currently meet the requirements. They are the Bank of Taiwan (台灣銀行), the Land Bank of Taiwan (土地銀行), the First Commercial Bank (第一商銀), the Taiwan Cooperative Bank (合作金庫), the Hua Nan Commercial Bank (華南商銀), the Chang Hwa Bank (彰化商銀), the United World Chinese Commercial Bank (世華聯合商銀), the International Commercial Bank of China (中國國際商銀) and the Chinatrust Commercial Bank (中國信託商銀).

  The announcement pushed some financial shares higher yesterday.

  Chinatrust Commercial Bank rose by 4 percent or NT$0.9 to NT$23, while the International Commercial Bank of China rose by 2.1 percent or NT$0.5 to close at NT$23.

  Neal Stovicek, strategist for National Securities Corp (建弘證券), said that the latest move underscores the government's commitment to ease its China investment policy.

  "A lot remains to be done on reforms in the domestic banking system, which is the reason why banking shares continue to remain lackluster despite their historically cheap valuations," Stovicek said.

  Ta Chong Bank (大眾銀行) yesterday also said that it is in acquisition talks with a foreign financial institution, although it did not disclose the details. "This shows that we may have M&As before we have AMCs [asset management companies]," Stovicek said.

  Yang Ya-huei (楊雅惠), an economist at the Chung-Hua Institute for Economic Research (中經院), who is currently directing a major research project on China's banking system for the ROC Bankers Association (銀行公會), said that any interaction with China's financial system is a plus for Taiwan.

  But she said that future success will depend on the strategy of individual Taiwanese banks and how they go about serving their corporate clients in China.

  "The location of the offices are also quite important," Yang said, who is due to publish her report on the Chinese banking system at the end of this year.

  For your information

  China bound banks

  * Bank of Taiwan * Land Bank of Taiwan * First Commercial Bank * International Commercial Bank * Taiwan Cooperative Bank * Hua Nan Commercial Bank * Chang Hwa Bank * United World Chinese Commercial Bank * Chinatrust Commercial Bank
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