Chinese banks take advantage of ECFA to move into Taiwan

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Recently Taiwan's Financial Supervisory Commission, the main financial regulator, said it had approved applications submitted by Bank of China and Bank of Communications to establish branches in Taipei. The banks will only be allowed to engage in limited business in the country, e.g. can only accept deposits higher than NT$3 million (US$100,350), only provide corporate loans. Further, the banks will need to receive approval from Taiwan's central bank if they wish to engage in f/x.

Although the business is limited, this is a pretty clear indication that the ECFA is working. We had talked about this in the Kapronasia whitepaper with Oracle last year, but although ties between Taiwanese and Chinese banks have existed for many years, the ECFA has helped to strengthen them by encouraging cross-straits investment. Coming the other way, Taiwan's Hua Nan Commercial Bank's branch in Shenzhen has been approved for renminbi business, while applications from Cathay United Bank's Shanghai branch and Chang Hwa Commercial Bank's Kunshan branch, Mega International Commercial Bank's Suzhou branch, Bank of Taiwan's Shanghai branch and E. Sun Commercial Bank's Dongguan branch are in process.

The 'Crossing the Straits' report from Kapronasia and Oracle is a free report and can be accessed here: {rsfiles path="2011-Apr-KapronasiaOracle_BankingCrossStraits_TaiwanMarketStudy_EN.PDF"}.

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