Chinatrust Financial Holding Co. (2891.TW) President Daniel Wu on Thursday urged Taiwan’s government to widen the Chinese-yuan business scope of Taiwanese banks more quickly “as competition is growing very strongly.”
All onshore banks in Taiwan, foreign and domestic, are only allowed to offer yuan cash settlement services, while their offshore units — mostly in Hong Kong — enjoy a much wider business scope such as taking yuan deposits, extending yuan loans or investing in yuan-denominated securities and other investment products.
Taiwan’s central bank said earlier that the limited scope for the onshore yuan business is largely because Taiwan, unlike Hong Kong, doesn’t have a direct yuan clearing mechanism with China. For now, all clearing between yuan and the New Taiwan dollar is all done via BOC Hong Kong (Holdings) Ltd. in Hong Kong, China’s only offshore yuan center.
The central banks of Taiwan and China are still working toward a direct clearing system, as China is Taiwan’s biggest trade partner. Both sides have said they aimed at reaching a preliminary agreement on such a system in the first half of the year. The reason for the delay isn’t known.
Mr. Wu also said Chinatrust is still evaluating bank-stake purchases in China but declined to disclose more details.
Chinatrust Financial is the parent company of Chinatrust Commercial Bank, Taiwan’s largest credit-card issuer and is among the most aggressive Taiwanese lenders to expand overseas due to the saturated home market.
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