萬國法律事務所

Ever since the signing of cross-strait MOUs in November 2009, it has been widely expected that the restrictions imposed on inward investment originating from PRC-based financial institutions would follow the current foreign investment criteria. However, according to a recent announcement by Taiwan’s Financial Supervisory Commission (FSC), a smaller holdings allowable for PRC-based financial institutions in Taiwan’s financial institutions, likely to be 5% or 10%, is now under sonsideration and will be subject to a final decision by the Executive Yuan.

Nonetheless, the ceiling fixed for Taiwan’s financial institutions to invest in counterpart sectors across the strait in PRC seems to be considerably more relaxed. A single investor’s ownership in one financial institution is likely to be limited to 20%, and combined ownership by multiple investors in one financial institution is likely to be limited to as much as 25%.

Particularly in the bank sector, the FSC’s policy encourages Taiwan’s banks to buy stakes or establish representative offices, branches or subsidiaries in PRC, given that the FSC will be able to pursue effective supervision of said operations in accordance with the MOUs. Applicants seeking to establish bank branches in PRC must have a non-performing loan ratio of below 1.5~1.7% and a bad-debt coverage ratio of over 60%~80%. Seven Taiwan banks having PRC representative offices for more than two years are expected to meet said prerequisites and to be upgraded to branches.