RULES GOVERNING RENMINBI BUSINESS OF TAIWAN BANKS

09/01/2011

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On 21 July 2011, the Financial Supervisory Commission (FSC) announced the Rules Governing Renminbi Business of Taiwan Banks (the "Rules"), allowing offshore banking units ("OBU") and third-area branches of Taiwan banks to engage in Renminbi business. The Rules took effect on the same date.

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Business Scope

OBU: the businesses set forth under Article 4 of the Offshore Banking Act (which sets out 10 business items, including accepting foreign currency deposits from individuals, juristic persons, government agencies within the territory of Taiwan, or financial institutions within or outside the territory of Taiwan).

Third-Area Branch: the businesses approved by the local financial authority where the branch is located, provided however that the bank shall obtain prior approval from the FSC if any of the businesses is not allowed under Taiwan financial laws and regulations.

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Counterparty

OBU: individuals, juristic persons, government agencies or financial institutions outside the territory of Taiwan, including individuals, juristic persons, organizations, other institutions in Mainland China and their branches in a third area.

Third-Area Branch: no restrictions.

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Agreement on Settlement and Clearing of Renminbi

If an OBU or third-area branch of a Taiwan bank intends to conduct the Renminbi business, the Taiwan bank should file an application to the FSC. To ensure that the source of Renminbi for the OBU or third-area branch is stable, an agreement on settlement and clearing of Renminbi should be included as part of the application documents:

1.

A copy of the agreement on settlement and clearing of Renminbi to be entered into with a correspondent bank (e.g., a bank in Mainland China or its overseas branch); or

2.

A copy of the agreement on settlement and clearing of Renminbi previously signed with a correspondent bank.