Taiwan's Foreign Banks with Subsidiaries Allowed to Keep Local Branches

Taiwan's Financial Supervisory Commission (FSC) has recently decided to allow foreign banks with subsidiaries in Taiwan to keep instead of closing one branch each here, on the condition that the businesses run by subsidiaries and branches have to be separate, meaning the branches of foreign banks in Taiwan are allowed to only handle corporate financing and derivative financial products.

So far only five foreign banks in Taiwan have set up both subsidiaries and branches, namely Citibank, the Development Bank of Singapore, Australia and New Zealand Banking Group, the Hongkong and Shanghai Banking Corp., and Standard Chartered Bank.

With the branches of the said five foreign banks having underwritten many unsecured syndicated loans to Taiwanese enterprises, including such leading enterprises as Taiwan Semiconductor Manufacturing Co. and Hon Hai Precision Ind. Co., such loans will have to be transferred to overseas branches if forced to close. This is the main reason why FSC intends to allow them to keep running branches here so as to retain the syndicated loan business here. (JL)