The government is considering allowing additional banks to set up representative offices in China, Minister of Finance Lee Yung-san (
Six Taiwanese banks are currently awaiting approval from China to set up shop there.
Lee yesterday said it may allow more banks to set up representative offices, a precursor to expanded operations later.
"[The ministry] may soon allow a second batch of banks to apply for permission to open liaison offices in China," Lee said yesterday in Taipei at a seminar to discuss the development of the nation's finance industry.
He didn't elaborate on what the policy restrictions would be.
Lee said that with China and Taiwan in the WTO, financial activity and interaction across the Strait have intensified.
As a result, changes to government policy will be needed, he said. To boost competitiveness, more Taiwanese banks should be allowed to operate in China.
According to the latest figures from the Investment Commission under the Ministry of Economic Affairs, Taiwan's indirect investment in China was US$248 million in April -- up 47.6 percent from the year before.
That brings the total for the first quarter of the year to US$816 million.
Just two banks have been allowed by the governments on both sides of the Strait to set up representative offices in China so far. Chang Hwa Bank (
The offices are expected to obtain branch status within three years.
Chinese authorities are still reviewing the applications of six other Taiwanese banks. They are Land Bank of Taiwan (土地銀行), First Commercial Bank (第一銀行), Hua Nan Commercial Bank (華南銀行), Chinatrust Commercial Bank (中國信託銀行), Taiwan Cooperative Bank (合作金庫) and International Commercial Bank of China (中國商銀).
"Approval will arrive sooner or later. But it will take at least another five years before the bank can conduct any business with Chinese yuan," said Yeh Chin-ruey (
According to Yeh, after a Taiwanese bank opens a branch, Chinese authorities will allow it to conduct transactions in the Chinese currency once it shows two years of profitability.
Yeh said the Chinese market is becoming consumer-driven, and "banks will go anywhere their clients are."
But initially, Taiwanese banks operating in China will primarily provide services to Taiwanese business people.
Branch operations in China will also help Taiwanese banks monitor loans to those business people, he said.
Despite government hopes to allow more banks to set up shop in China, an industry analyst said yesterday the ball was in China's court.
"Chinese authorities have tougher restrictions regulating Taiwanese banks that want to set up shop there. That's the real challenge," said Rachel Wu (
Lee yesterday said the government won't start accepting new applications until China lets the six in waiting to set up offices.
And while several Chinese banks have reportedly expressed an interest in coming to Taiwan, Lee said revisions to the Statute Governing the Relations Between the People of the Taiwan Area and the Mainland Area would be needed first.
The government allows just offshore banking units to engage in direct transactions with their Chinese counterparts.
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