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Approval for Taiwanese banks to set up branches in China expected

Approval for Taiwanese banks to set up branches in China expected

Taipei, Sept. 11 (CNA) With the implementation of the landmark cross-Taiwan Strait economic cooperation framework agreement (ECFA) on the horizon, China might announce approval for a first batch of Taiwanese banks to set up branches in China as early as next month, banking industry officials said Saturday.
According to Taiwan's Straits Exchange Foundation (SEF) that same day, Taiwan and China have agreed that the ECFA will take effect Sept. 12.
"`The sooner we can open for business in China, the earlier we can profit' has become a slogan for Taiwan's banking institutions, " an official said. Banking industry officials said most Taiwanese banks are putting great efforts into launching trade financing and working capital financing for Taiwanese businesses in China, trying to enlarge their lending base.
First Financial Holding Co. Chairman Tsai Ching-nain suggested that the Taiwanese banking industry should first focus on developing the financing business for small and medium-sized Taiwanese companies operating in China.
Tsai said the next phase should be developing wealth management business for local Taiwanese businessmen and assets-rich customers.
He also said that Taiwanese banks should consider setting up branches in the Chinese cities of Chongqing, Chengdu, Dalian and Shenyang to cultivate the markets there.
Taiwanese banks that have been approved by the Financial Supervisory Commission to upgrade their representative offices in China to branches include Hua Nan Bank, First Bank, Taiwan Cooperative Bank, Chang Hwa Bank, Cathay United Bank and Land Bank.
The banks are currently awaiting approval from China's banking regulatory commission to establish branches there.
According to the ECFA's "early harvest" program, Taiwanese banks can upgrade their representative offices in China to branches one year after being set up there, and the branches can begin offering Chinese yuan-denominated banking services after two years of operations if profits have been registered for the second year. However, any Taiwanese bank branch which registers profit within one year of operation in China can offer Chinese yuan-denominated banking services, but only for China-based Taiwanese businesses.
These are seen as major Chinese concessions under the ECFA because it takes other foreign banks at least five years before they are allowed to offer Chinese yuan-denominated banking services.
However, other Taiwanese banks -- ones that have not been able to enter the China market in the first batch -- are also trying to use a variety of means to initiate cooperation with Chinese banks.
SinoPac Holding and its banking and security subsidiaries have signed a memorandum of understanding (MOU) or an alliance agreement with its Chinese counterparts, while Taishin Financial Holding also announced earlier this week that it will sign a letter of intent with Nanjing Zijin Investment Co..
Far Eastern International Bank is planning to sign a letter of intent with Bank of Chongqing and is expected to become one of the first Taiwanese banks to develop business in a so-called "green channel" region in southwestern China.
(By Tien Yu-pin and Fanny Liu)