Taiwan's FSC to Adopt "Global Quota Control" to Offset Market Saturation

To comply with governmental policy, Taiwan's Financial Supervisory Commission (FSC) recently announced that it will adopt "global quota control" to freeze the number of domestic bank branches starting in 2015.

So the FSC will not allow domestic banks in Taiwan to set up new branches except to replace old branches that close. For instance, the Taiwan Cooperative Bank and Citibank (Taiwan) together closed six branches on the island last year, which the FSC has allowed to be replaced with five new ones this year.

However banks will be allowed to set up branches in remote areas to meet needed demand, with banks holding sizable loans to small and medium enterprises being allowed to apply to set up one to three new branches each.

The FSC emphasizes that Taiwan is saturated with banks, with the fierce competition working against the sound development of financial institutions. Taiwan's domestic banks have  3,482 branches island-wide, excluding 39 foreign bank branches.

The Taiwan Cooperative leads with 286 branches, followed by 190 branches of First Bank and 186 branches of Hua Nan Bank. However, in the first five months of this year First Bank scored pretax profits of only NT$7.3 billion (US$243.33 million), far lower than  banks with fewer branches as Mega International Commercial Bank and CTBC Bank. In the same period, the former, with 108 branches, posted pretax profits of NT$13.1 billion (US$436.67 million) and the latter, with 147 branches, gained pretax profits of NT$10.2 billion (US$340 million). (JL)