Taiwanese banks to invest more in the mainland

Government easing investment regulations.

The Taiwanese 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.

Tseng Ming-chung, chairman of the Financial Supervisory Commission, invited presidents and general managers from 16 financial holding companies to a meeting to discuss potential deregulation.

Some participants suggested that the regulations governing investments by financial institutions between Taiwan and mainland China areas be modified to remove the current 15% net worth restriction, and instead apply the Banking Act, which stipulates that the total investment amount shall not exceed 40% 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% of the company's net worth. When a domestic bank makes equity investments in mainland China, the investment may not exceed 15% of the bank's net worth.

The cross-strait service trade agreement is currently being reviewed in Taiwan’s Legislature, which will also review amendments to regulations governing investments by financial institutions between Taiwan and mainland China.