Until recently Taiwanese banks have been barred from operating in mainland China. This could change very soon.
In March, the Taiwanese government announced that banks, as well as insurers and stocks and futures brokerages, will be allowed to invest in one Chinese counterpart under the upcoming Economic Cooperation Framework Agreement.
Expected to be finalised before the second half of this year, the agreement will allow domestic banks to invest as much as 15 per cent of their net worth into China, while allowing mainland Chinese access into the Taiwanese financial services sector as well.
Six Taiwanese state-owned banks have already applied to the Financial Supervisory Commission – Taiwan’s banking sector regulator – to set up branches in mainland China. They include Taiwan Cooperative Bank, First Commercial Bank, Land Bank of Taiwan, Chang Hwa Bank, Business Bank of Taiwan, and Hua Nan Commerical Bank. Bank of Taiwan, another state-owned bank, said earlier this month that it plans to open its first mainland branch in Shanghai.
Callan Anderson, group managing director for Gemini Personnel, says Taiwanese banks are expected to create more jobs in the banking sector in China, but the overall impact will be minimal. “It’s a drop in the ocean. Taiwan is small. It’s more of a political or face move than anything else. It will take time to get established.”
Renee Tsai, a banking analyst at KGI Securities in Taipei, says Taiwanese banks are expected to initially focus on building their corporate banking portfolios in China, before moving onto credit cards and retail wealth management once they have been granted the necessary licences.
She expects Fubon Bank, which already has an extensive branch presence in Hong Kong, to be particularly aggressive in its China expansion.
Anderson adds that for Chinese candidates, there might be an additional consideration in deciding whether to work for a Taiwanese bank – politics.
“I know that if I was a mainland Chinese resident I wouldn’t be dashing to the nearest Taiwanese bank looking for a job and be very proud about it,” he says. But this is less likely to be a problem for experienced bankers with established track records than for their junior colleagues.
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