Taiwanese Banks Plan to Set up Subsidiaries in China

Cathay United Bank will soon become the third Taiwanese bank to run a subsidiary in China after having been approved recently by the Financial Supervisory Commission (FSC) to establish a subsidiary in Shanghai.

Over 10 Taiwanese banks have branches in China but only two operate subsidiaries there, namely SinoPac Bank and Taipei Fubon Commercial Bank. The former has directly set up a subsidiary in Nanjing and the latter firstly merged with First Sino Bank, a joint-venture in China, to then restructure it into a subsidiary.

Cathy United established a branch in Shanghai in 2010 to become the first Taiwanese bank to operate in China, and now plans to run a subsidiary in the same city and will reportedly merge its Shanghai branch and another branch in Qingdao, Shangdong Province into the planned subsidiary.

FSC officials say that a subsidiary of a foreign bank in China is allowed to offer a wide range of financial services, including ATM cards, and allowed to apply for setting up six branches simultaneously.

Other Taiwanese banks planning to set up subsidiaries in China include E. Sun Bank, Bank of Taiwan (BOT) and Mega International Commercial Bank.

The 10 Taiwanese banks in China scored profits of US$50 million last year, and raked in profits of US$22 million in the first quarter of the year for a whopping annual growth of 200% and almost half of last year's total. In the same quarter Cathay's Shanghai branch posted the highest profits of US$5 million and BOT's Shanghai branch came second with US$4 million.

So far only six Taiwanese banks in China, including Cathay, First Bank, Taiwan Cooperative Bank, Chang Hua Bank, Hua Nan Bank and Land Bank of Taiwan, are allowed to handle renminbi (RMB)-based financial businesses, with all the six banks seeing rising loan portfolios.

Cathay led in loans of US$1.2 billion in Q1, 2014 and First Bank the second highest of US$800 million, both posted by branches in Shanghai. Taiwan Cooperative Bank took the third place with US$600 million in loans extended by its branch in Suzhou, Jiangsu Province. The remaining three banks posted corresponding loans of about US$500 million each. (JL)

Profitability and Loan Portfolios of 10 Taiwanese Banks in China in Q1, 2014
Bank	Profits (US$M)	Loans  (US$M)
Cathay	Over 5	About 1,200
BOT	Near 4	About 200
Mega	Near 3	About 300
First	Near 3	About 800
Chang Hua	Over 2	About 500
Taiwan Cooperative	Near 2	About 600
Hua Nan	Over 1	About 500
Land Bank	About 1.5	About 500
E. Sun	Near 1	About 100
CTBC Bank	Near 2	About 200

Source: the said banks