Financial institutions posed to invest more in mainland
By John Liu, The China PostTAIPEI, Taiwan -- The government has begun moving toward relaxing regulations on the amount of investment Taiwanese financial institutions can make in mainland China, and financial institutions are posed to further cooperate with businesses across the strait.
September 3, 2013, 12:05 am TWN
Tseng Ming-chung (曾銘宗), Financial Supervisory Commission (FSC, 金管會) chairman, invited presidents and general managers from 16 financial holding companies to a meeting yesterday to discuss potential deregulation.
In yesterday's meeting, some participants suggested that the regulations governing investments by financial institutions between Taiwan and mainland China areas be modified to remove the current 15-percent net worth restriction, and instead apply the Banking Act, which stipulates that the total investment amount shall not exceed 40 percent of a bank's paid-in capital.
The current regulation stipulates that when a domestic financial holding company makes an equity investment in mainland China, the investment amount may not exceed 10 percent of the company's net worth. When a domestic bank makes equity investments in mainland China, the investment may not exceed 15 percent of the bank's net worth.
Relaxation Set in Motion
The cross-strait service trade agreement is currently being reviewed in the Legislature, which will also review amendments to regulations governing investments by financial institutions between Taiwan and mainland China, the FSC said, adding that the regulations will be relaxed so long as the trade agreement clears the house.
With the Banking Act applied, the operation funds allocated in Chinese branches would not be considered as part of the investment amount. The FSC estimated that this would free up at least NT$41.8 billion for 10 Taiwan banks currently operating in mainland China.
Some participants in the finance industry further suggested that the Banking Act be amended to change the 40-percent paid-in-capital into 40-percent net worth. This will further increase the amount of investment that banks are allowed to make in China, the FSC said, adding that it is currently evaluating this option.
Finance Industry Players Ready to Make Headway
Players from Taiwan's finance industry, including Taiwan Financial Services Roundtable (TFSR) Chairman Shu-de Lee (李述德), recently met with Wuxi city officials in southern Jiangsu province.
It was the first meeting of such a kind across the strait. A basic consensus has been made regarding the setup of a cross-strait finance and technology cooperation experimental zone.