萬國法律事務所

According to recent reports published in major newspapers, Taiwan’s Financial Supervisory Commission (“FSC”) recently met with representatives of the Ministry of Justice (“MOJ”), banks, and trust associations to explore the feasibility of allowing loans secured by pledges on funds purchased through banks’ trust funds and or pledges on high quality bonds with liquidity.

Currently, as self-regulations promulgated by trust associations set out that when handling the business of pledges, in order to prevent conflicts of interest, banks cannot terminate trust agreements due to the exercise of a pledge, and thus no bank in Taiwan is willing to provide loans to investors with funds or bonds as securities.

In said meeting, according to the news reports, the FSC, the MOJ, banks, and trust associations had reached a preliminary consensus that the self-regulations may be amended so that with a borrower’s / trustor’s agreement, banks may terminate the trust agreement with said borrower / trustor when a he/she defaults on principle or interest payable to the bank.

It is estimated that foregoing amendments, which could be announced by as soon as June or July of this year, would considerably improve investors’ flexibility on funds procurement and increase growth in the wealth management business of banks.