Newsletter
FSC ANNOUNCED THE NEGA-TIVE-LISTING APPROACH FOR BANKING BUSINESS
On 23 March 2005, the Financial Supervisory Commission promulgated the Negative-Listing Rules for Financial Business Engaged by Banks. In future, a bank that meets the following four conditions will be able to engage in new areas of financial-related business without obtaining a approval from the regulator in advance: (i) its non-performing loans (including surveillance loans) ratio in each of the preceding six months has not exceeded 2.5 %; (ii) its non-performing loans coverage ratio is at least 40%; (iii) its self-owned capital to risk-based asset ratio in the most recent period reaches 10%; and (iv) within the last year the regulatory authorities have not found it responsible for any major non-compliance or imposed administrative pen-alties on it totaling NT$1 million or more.
However, the business involving trusts, bills fi-nance, securities, futures, securities investment trusts, securities investment consultancy, insur-ance, foreign exchange, derivative products, and cross-strait business remain subject to the vari-ous provisions of the relevant laws and regula-tions. Where such laws and regulations impose prohibitions or restrictions, these prohibitions or restrictions continue to apply.
With respect to the Taiwan branch of a foreign bank, the above requirements regarding non-performing loans ratio, provision for non-performing loans, and regulatory compli-ance apply to the relevant ratio and record of the Taiwan branch; while the self-owned capital to risk-based asset ratio of the Taiwan branch refers to such ratios of the bank's head office for the most recent period as certified by a certified public accountant.
Thus, when a bank wishes to engage in a new area of financial business, it is in principle no longer required to make a prior application to the regulator and needs only to file a notice together with a business plan and a statement that it is in compliance with the relevant regulatory re-quirements with the regulator within 15 days after the commencement of such new business.
If the required attachments are incomplete and the bank fails to cure the deficiency within a time limit set by the regulator, the regulator may order the bank not to accept new cases of such new business until the deficiency has been cured; but the bank may still conduct such new business to the extent of the cases already undertaken prior to the regulator's suspension order.