Government and Policy

Mainland, Taiwan establish banking supervision co-op

(Xinhua)
Updated: 2011-04-26 06:32

TAIPEI - Banking supervision authorities from the Chinese mainland and Taiwan on Monday jointly announced the establishment of a regular meeting mechanism to negotiate regulations for commercial banks doing businesses in each other's markets.

The leaders of the two sides' banking supervision bodies or other designated representatives will hold regular talks every six months, alternating locations between the mainland and Taiwan, according to a press conference in Taipei on Monday evening.

Fan Wenzhong, a spokesman for the mainland's banking regulatory agency, said that the two sides agreed on a procedure for daily communication, regular visits and  procedures for spot inspections at banks.

The mainland regulatory agency hopes that its counterpart in Taiwan could gradually reduce the criteria for mainland banks to enter Taiwan's financial market and give more freedom to established branches in the island.

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Taiwan's regulator has agreed to actively consider the demand, a press release by the mainland's Banking Regulatory Commission said.

The mainland gave gestures of goodwill to proposals from its Taiwan counterpart at the meeting. The proposals would support Taiwan' s commercial banks in setting up more branches on the mainland and conducting more services, it said.

The press conference came after a four-hour closed-door meeting presided over by leaders from the mainland and Taiwan's banking regulators Chen Yuh-Chang and Liu Mingkang, who arrived on the island last week for the first official contact between the two sides.

It was the first time for banking regulators from the two sides to hold talks on cooperation in financial supervision.

It was also a step forward for the first time since 1949 for the mainland and Taiwan to send official agencies to hold direct negotiations, although the two regulatory bodies carefully avoided mentioning each other' s official names.

The mainland and Taiwan usually send authorized organizations, the Association for Relations Across the Taiwan Straits (ARATS) and the Straits Exchange Foundation (SEF), to negotiate cross-Strait issues, including signing the cross-Strait Economic Cooperation Framework Agreement (ECFA).

The Chinese mainland and Taiwan signed a cross-Strait Financial Cooperation Agreement and a Memorandum of Understanding (MOU) on Cross-Strait Banking Supervision Cooperation in 2009. After the landmark ECFA signed last year, the mainland has approved nine banks from Taiwan to establish branches on the mainland, and six of them have already become operational.

In Taiwan, four banks from the mainland have been approved to establish offices, while more mainland banks are eager to enter the island for financing and trading. Commercial banks from both sides are ready to begin offering financial services for individuals and businesses.

"The two regulatory bodies are like referees," said Fan Wenzhong. "When the players are ready to enter the arena but the referees have not communicated for standardized rules, there will be a lot of risks if the game starts."

The arrival of mainland's banking regulator delegation headed by Liu Mingkang has aroused rising expectations among bankers on both sides that the top negotiators could officially announce approval for Taiwan's banks to conduct Renminbi business in the mainland as well as other good news for mainland banks in Taiwan.

However, except for a warm and friendly atmosphere as well as strong confidence to a promising cross-Strait financial cooperation and market, the two spokesmen from both sides did not give any concrete details and results of the press concerned issues.

"The press should have more patience," Fan said. "I think the establishment of a cooperation mechanism is more important since it will be an essential platform for both sides to tackle other detailed problems."

"Today's meeting is a hard-won yet good start for banking regulatory agencies of the mainland and Taiwan, and we will keep the press informed for any new information in the upcoming days of our visit," Fan said.

According to the mainland delegation's schedule, it will continue talks with Taiwan's banking regulatory agency from Tuesday to Thursday.