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Pace of Taiwanese banks New Southbound expansion slows

12/09/2023 07:30 PM
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A Changhua Bank branch in Taipei. The bank was the only financial institution that applied and received approval to open an new overseas branch -- in Sydney -- during the first 11 months of 2023. CNA file photo
A Changhua Bank branch in Taipei. The bank was the only financial institution that applied and received approval to open an new overseas branch -- in Sydney -- during the first 11 months of 2023. CNA file photo

Taipei, Dec. 9 (CNA) Data released by the Financial Supervisory Commission (FSC) on Friday showed that Taiwanese banks have slowed down their pace in opening representative offices or branches in the countries targeted by the government's "New Southbound Policy."

According to the FSC, Taiwan's top financial regulator, only two local banks applied for and received approval so far this year to open outlets in the countries under the New Southbound Policy.

In June, Chang Hwa Commercial Bank secured approval from the FSC to open a branch in Sydney, Australia before E. Sun Commercial Bank got a nod from the commission in September to set up a representative office in Kuala Lumpur, Malaysia.

While Taipei Fubon Commercial Bank received FSC approval in April to upgrade its existing representative office in Sydney into a branch, the branch was not in the new outlet category, the FSC said.

The New Southbound Policy aims to enhance trade and exchanges between Taiwan and 18 countries in Southeast and South Asia, as well as Australia and New Zealand, in a bid to reduce Taiwan's dependence on China.

The policy was introduced after President Tsai Ing-wen (蔡英文) took office in 2016.

In response to the government's initiative to forge closer ties with the 18 countries, the FSC has set a goal since 2017 to encourage Taiwanese banks to open no less than three new representative offices or branches in these countries a year.

Graphic: Executive Yuan
Graphic: Executive Yuan

In 2017 alone, the FSC issued approval to allow Taiwanese banks to set up 17 outlets in the 18 countries, and eight each year during the 2018-2020 period before falling to five in 2021 and one in 2022, the FSC's data showed.

During the period from 2017 to November 2023, the FSC issued approval for opening a total of 49 representative offices and branches in the 18 countries.

Commenting on the fall in interest to set up outlets in the 18 countries by local banks, Lin Chih-chi (林志吉), deputy director of the FSC's Banking Bureau, said if no more banks file applications by the end of this year to push up the number of new outlets to three targeted by the commission, the FSC will consider whether it will keep the goal of no less than three new outlets a year unchanged.

When asked whether the banking markets in the 18 countries have been so saturated that local banks had to scale back their efforts in advancing into these markets, Lin did not respond to the question directly but said it was up to banks to judge the market conditions.

Lin emphasized how local financial institutions will map out their expansion plans in a foreign market would depend on economic activities and bilateral trade and investments between the market and Taiwan.

(By Hsieh Fang-yu and Frances Huang)

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