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AMENDMENTS TO THE REGULATIONS GOVERNING THE BANKING ACTIVITY AND THE ESTABLISHMENT AND THE INVESTMENT BY FINANCIAL INSTITUTION BETWEEN THE TAIWAN AREA AND THE MAINLAND AREA
To ease restrictions on business dealings between Taiwan and Mainland China financial institutions and enhance competitiveness of Taiwan banking industry, the Financial Supervisory Commission announced amendments to the "Regulations Governing the Banking Activity and the Establishment and the Investment by Financial Institution between the Taiwan Area and the Mainland Area" ("Regulations") on 7 September 2011. Set forth below are the major amendments:
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The original Regulations stipulated that either a Taiwan bank or its third-area subsidiary bank, but not both, may make investment in Mainland China. Among the three approaches prescribed under the Regulations, that is, (i) setting up a branch; (ii) setting up a subsidiary bank; or (iii) making equity investment (in one financial institution in Mainland China only), a Taiwan bank or its third-area subsidiary bank was allowed to choose at most two types of investment. The amended Regulations removed the foregoing restrictions on (a) single investing entity only, (b) at most two out of three types of investment, and (c) equity investment in one Mainland China financial institution only.
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To facilitate business development of Taiwan banks in Mainland China, the Regulations no longer require that a Taiwan bank should have two or more branches in Mainland China if it intends to apply for approval to convert its branch in Mainland China into a subsidiary bank.
