Boost for yuan trade as Taiwan eases bank rules
Move to raise limit on mainland lenders' stakes in their Taiwanese counterparts will generate investment opportunities for the industry
Taiwan's commercial banks and their mainland counterparts will start using each other to grow their yuan business once a new relaxation of investment rules takes effect.
New investments in shares of Taiwanese banks would follow a deal reached on April 1. Under the qualified domestic institutional investor scheme, Taiwan will let mainland firms buy up to 15 per cent of shares in Taiwanese banks, up from 10 per cent. Mainland banks can buy up to 10 per cent of shares, compared with 5 per cent before the new rules.
Mainland lenders may also buy as much as 15 per cent of the shares in an unlisted Taiwanese bank holding company and 20 per cent of a holding company's banking unit.
The relaxation of rules follows a gradual opening of Taiwan's market to the mainland since 2008, when the two governments put aside 60 years of political differences to form economic and trade ties. The new rules reflect increasing demand for financial services created by other post-2008 cross-strait links.
When the rules take effect, within a Taiwan government estimate of two months, the island's SinoPac Bank says it will apply to local regulators to allow a 20 per cent investment from mainland giant Industrial and Commercial Bank of China.
No one had applied under the old rules, said an employee at the Taiwanese regulator, the Financial Supervisory Commission. Dealmakers in Taipei said the earlier investment caps were too low for mainland investors.