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Fujian bank to become first to enter Taiwan market

By Xin Zhiming (China Daily)
Updated: 2009-03-09 07:39

A Fujian-based commercial bank will become one of the first mainland banks to open in Taiwan, a local Taiwan affairs office official said.

Related readings:  Taiwan bank opens office in Beijing  New trend with Taiwan bank debut in Beijing

"A local shareholding commercial bank will be allowed to open branches in Taiwan," Fujian province's Taiwan affairs office director Deng Benyuan told China Daily on Saturday.

But he did not name the bank or provide a timetable for the ice-breaking step in cross-Straits financial cooperation.

Taiwan's Fubon banking group became the first Taiwan bank to enter the mainland market after it bought a 19.9 percent stake in Xiamen city commercial bank last November.

The mainland and Taiwan will reportedly sign a memorandum of understanding on financial cooperation by the second quarter of this year, after which the mainland's banking regulators would allow Fujian-based Industrial Bank, Shanghai Pudong Development Bank, China Merchants Bank and the Industrial and Commercial Bank of China to enter the Taiwan market.

The launch of mainland banks' branches in the island may not dramatically increase profits in a short time but will encourage Taiwan enterprises to invest in the mainland, analysts said.

"Taiwan's banks, most of which are small or medium-sized, are trapped in fierce competition," Fudan University in Shanghai researcher Sun Lijian said.

"They often adopt low pricing strategies to win more customers."

Mainland banks may not have much room to develop their business on the island, he said.

But they have widespread mainland networks and are familiar with its business environment, which will help them provide value-added services for Taiwan customers investing in the mainland, Sun said.

Fujian, which faces Taiwan across the Taiwan Straits, will also allow the new Taiwan dollar to be used province-wide to help Taiwan people traveling or doing business in the province, Deng said.

In the current pilot project, the new Taiwan dollar can be exchanged into yuan at Bank of China in five Fujian cities - Fuzhou, Xiamen, Zhangzhou, Quanzhou and Putian.

"We are applying to allow business to be conducted by all commercial banks in all of Fujian, and it will be approved," Deng said.

"We will engage in closer cooperation with Taiwan to help its financial institutions cope with the global financial crisis."