Taiwan, China banking watchdogs set for talks

Bankers voiced their hopes on the eve of the first official meeting between the top banking watchdog agencies from both sides of the Taiwan Strait in Taipei.

Chairman Chen Yuh-chang of Taiwan's Financial Supervisory Commission (FSC) will lead a delegation to meet with his counterpart, Chairman Liu Mingkang, of the China Banking Regulatory Commission,

This is the first high-level face-to-face discussion since the two sides formally inked a financial memorandum of understanding on financial service cooperation involving the sectors of banking, securities, futures, and insurance services.

Liu, who arrived on Friday, and the Chinese delegates will also meet with members of the Taipei-based Bankers Association of the Republic of China.

Bankers in Taiwan said their belated entry into the Chinese market due to previous restrictions has placed them in a disadvantageous position in competing with banks from Hong Kong and foreign nations.

An earlier permission for Taiwan banks to provide financial transactions in the Chinese currency will enable them to more effectively take part in open competition, they said.

There are presently six banks in Taiwan maintaining branches in China plus several others operating representative offices.

Some of the bankers also expressed their wish that the top banking regulators may work out deals on allowing financial institutions between Taiwan and China to take stakes in each other to beef up overall competitiveness.

During the meeting today, the officials are expected to establish and inaugurate a systematic cross-strait financial supervisory platform.

Many believe that Chen and Liu are very likely to agree on allowing Taiwanese banks to handle Chinese yuan operations in China more quickly than previously stipulated.

A senior FSC officials said all issues concerning financial service cooperation will be placed at the meeting table for discussion.

Chen and Liu are scheduled to hold a joint press conference at around 5 p.m. at the conclusion of the meeting and talks today.

The cooperation meeting is also giving high hopes to both financial institutions and stock investors.

Financial stocks are likely to stage a new round of rallies because of growing optimism that cross-strait banking restrictions will be further liberalized with cooperative ties strengthened following the meeting, securities analysts said.

Analysts said the high-level meeting is one of the factors that will fuel buying interest in local financial stocks.

The market has already had high hopes for financial shares because of expectations that the central bank will continue to hike interest rates this year, they said.

Taiwan's central bank is predicted to raise benchmark interest rates by at least by 0.75 percentage points by the end of 2011, a move that will boost local banks' profits because of bigger interest rate spreads, the analysts said.

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