05.31.2001
Banks allowed to set-up rep offices in China

• The Executive Yuan yesterday passed a resolution that qualifies Taiwan banks to set up representative offices in China. The eligible banks are limited to those ranked within the ten largest banks in terms of asset size and equity value and with a BIS ratio above 8%, provided they have not violated any serious laws governing the banking industry within the last three years.

• Moreover, the banks should possess international banking professionals and have had experience establishing offices overseas. According to the Ministry of Finance (MoF), nine banks fulfilled the above criteria and can proceed to submit their applications. The banks include Changhwa Commercial (2801 'Zhang Yin'), First Commercial (2802 'Yi Yin'), Hua Nan (2803 'Hua Yin'), International Commercial Bank of China (2806 'Zhong Yin'), Chinatrust (2815 'Zhong Xin Yin') and UWCCB (2826 'Shi Hua Yin').

• The representative office can only do consultation and inquiry work on the mainland. MoF declined to confirm whether the office could be transformed into a full branch operation after two years' time. Much would depend on the future policies that determine the extent of Cross-Straits relations between the two governments.

• VB Primasia Investment Opinion: Most of the banks cited above have already started evaluating opportunities in China and will probably move very quickly to set up offices there. However, the timetable for actually making loans and/or accepting deposits in China is very uncertain. Therefore, we do not believe that this development will have any bearing on the overall performance of these banks in the foreseeable future.

WilliamFong@Primasia.com +886-[0]2-2547-8864