Chinese authorities are cracking down on Taiwanese banks in China for engaging in unauthorized lending practices and handling financial transactions without the necessary licenses, according to local reports yesterday.
The Liberty Times reported that Chinese authorities had found that Taiwan-based SinoPac Holding Co (
The report further stated that authorities and public security officials attempted to arrest Sinopac representatives at their unofficial office on the 15th floor of the Hua Yi Bank (
A Taiwanese bank representative in China, a relative of a Liberty Times reporter, informed the newspaper of the situation on Sunday. Financial Supervisory Commission (FSC) Vice Chairperson Susan Chang (張秀蓮) confirmed yesterday that Sinopac had not been authorized by either Taiwan or China to provide banking services in China.
"We've already begun investigating this situation and found that the situation is not as it is reported in the newspaper," Chang told the Taipei Times yesterday. Chang admitted however that there were difficulties in investigating the situation given cross-strait relations.
Chang also stated yesterday that she did not think that Taiwanese banks in China would conduct unauthorized financial transactions since licenses had not yet been obtained, but she said that if evidence were obtained to confirm the reports, fines would be imposed.
Despite Chang's confidence in local banks, media reports have called underground banking transactions commonplace in light of fierce competition to win business with the growing Taiwan-based Chinese business community in China. Local banks have gone so far as to provide loan services by routing money to a third country, according to reports.
The Mainland Affairs Council (MAC) has taken a passive stance on the issue. MAC Vice Chairman Chiu Tai-san (
He also pointed to the difficulties in investigating the situation given the lack of procedures for cross-strait financial supervision.
According to current regulations, banks must first obtain authorization from Taiwan's Financial Supervisory Commission (FSC). Following the commission's authorization, banks need to apply to the China Banking Regulatory Commission (中國銀監會) for a license to establish a China office.
However, China imposes heavy restrictions on the work that Taiwanese banks can conduct there to prevent the offices from offering their customers most regular banking services. The Taiwanese offices are limited to serving merely as information centers for investors.
Only after operating for two years can Taiwanese bank offices in China apply to the China Banking Regulatory Commission to upgrade to an official bank branch, and as such finance investments and provide banking services.
Ten banks have already obtained licenses from the FSC to conduct business in China. However, only seven of these banks have also received the China Banking Regulatory Commission's authorization to establish an office. No Taiwanese banks are currently authorized to set up a bank branch in China.
Han Mingzhi (
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