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New banking laws for Taiwan

Chris Hamblin, Editor, Editor, London, 28 January 2015

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Tseng Ming-chung, the chief executive of the Taiwanese Financial Supervisory Commission, has claimed that Taiwan has revolutionised its banking sector with five new pieces of legislation that his organisation will help to police.

The Banking Act, the Offshore Banking Act, the Insurance Act, the Financial Consumer Protection Act and the Electronic Payment Act were passed in the island republic recently. The Banking Act revamp is to give Taiwanese banks free rein for the first time to acquire assets overseas. The Insurance Act now entitles the FSC to interfere in the capitalisation of unprofitable insurance companies and, indeed, to take them over if their capital stocks are sufficiently low. The Financial Consumer Protection Act has been tweaked to allow the FSC to interfere with the relationship between bank executives and their wealth managers, ensuring that they cannot command them to sell proscribed products to high-net-worth individuals.

The bills have been on the stocks for more than a year. In October the Executive Yuan drew up an amendment (which presumably 'made the cut') to the Offshore Banking Act to allow Taiwanese insurance companies to set up offshore insurance units on the island. Article 22-6 stated that the offshore units of securities companies should be rescued from the restrictions of the Trust Enterprise Act, the Securities Investment Trust and Consulting Act and the Futures Trading Act. It is fairly safe to say that all Taiwanese banks have an offshore business unit, whose predominant business is usually renminbi banking outside China.

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