Taiwanese banks plan to tap into China through micro-credit business
Taipei, July 29 (CNA) Micro-credit companies may soon become an option for Taiwan’s financial institutions interested in tapping into the Chinese market, with regulators set to begin drafting rules for the business, according to local banks.
The alternative may prove attractive to Taiwanese banks frustrated by the pace at which China is opening its financial services market to overseas companies, including those from Taiwan.
Four banks have already expressed interest in setting up micro-credit companies in China since mid-July, when Taiwan’s Financial Supervisory Commission (FSC) announced plans to ease regulations on such operations.
The four banks are Taishin Financial Holding Co., Chinatrust Financial Holding Co., SinoPac Holdings, and Cosmos Bank, the FSC said earlier this month.
China decided to speed up the development of the micro-credit niche following the tightening of credit experienced by small-sized enterprises in late 2011.
Micro-credit companies provides loans of less than 50,000 Chinese yuan (US$7,835) with maturities of no longer than two years, according to China Banking Regulatory Commission regulations.
As of the end of March, there were 4,878 micro-credit companies in China that had lent out 444.72 billion yuan, data of the People’s Bank of China showed.
The industry is eyeing the potential of the micro-credit niche because of the long time Taiwanese banks must wait before being allowed to conduct Chinese yuan business in China.
The Chinese branches of six Taiwanese banks, for example, are now qualified to conduct Chinese yuan business with Taiwanese-invested companies by recording a profit for a full fiscal year, but only two of them have been actually licensed to do so.
These and other restrictions have pushed Taiwanese banks to seek other channels through which they can gain a foothold in the mainland market.
The FSC’s new plan to allow Taiwanese banks to set up micro-credit companies in China is also likely to create a new trend of investing in the service, according to some local banks, who said the micro-credit business is still at an early stage of development.
Another option embraced by Taiwanese financial services companies to move into China is the leasing business.
According to FSC statistics, 12 Taiwanese financial holding companies and banks have been approved to set up leasing companies in China, with First Financial Holding Co. and Taishin having set up two such companies each. -By Tien Yu-pin and Kay Liu
http://focustaiwan.tw/ShowNews/WebNews_Detail.aspx?Type=aALL&ID=201207290018
Category: Taiwan
