From Market, issue no.411, March 23, 2009
Translated by Zhang Junting
Original article: [Chinese]

Taiwan and the mainland were moving forward with negotiations for deeper financial ties, the results of which could spark a cross-pollination between banking sectors across the strait starting in 2009 and ease lending to Taiwanese doing business on the mainland.

During the top two political sessions this year, Chinese premier Wen Jiabao said he hoped to sign a memorandum of understanding for cross-strait financial cooperation.

Industry sources familiar with the matter have said the memorandum has become a top priority for the third cross-strait "Chen-Jiang meeting", between Chen Yunlin, chairman of the Chinese State Council's Association for Taiwan Strait Relations, and Jiang Bingkun, president of Taiwan's Straits Exchange Foundation.

Sources said the memo was likely to be signed during the first half of 2009, and banks on both sides were already preparing for the changes.

In mid-March, presidents of the two largest Taiwanese banks--Bank of Taiwan and Taiwan Business Bank--announced "mainland touchdown" plans.

And Bank of China, Industrial and Commerce Bank of China, China Construction Bank, and China Merchants Bank have submitted applications to set up branches in Taiwan to mainland banking regulators.

Zhang Xiulian, president of Bank of Taiwan, said during a March 15 meeting that the Bank would draft a business development plan for its mainland development, with Shanghai slated to be the first strategic stronghold. The Bank was already planning to expand business in the Yangtze River Delta, where it said there was a concentration of Taiwanese businesspeople and many business opportunities.

On March 13, Cai Qingnian, president of the Taiwan Business Bank, said they were seeking out ideal venues for subsidiary banks on the mainland, which would specialize in providing loans to small-and-medium-sized enterprises.

"Taiwan Business Bank is especially good at small-and-medium-sized business loans, which is precisely the service mainland banks hope to prioritize," Said Li Junsheng, vice-president of the Taiwan Business Bank.

There were seven Taiwanese banks with offices already on the mainland. After the memorandum is signed, they would be able to upgrade these offices to subsidiary banks, and potentially provide Renminbi services. Up to now they could only collect materials.

The lack of a Taiwanese banking presence on the mainland has been a headache for many Taiwanese doing business there. Many complained that since much of their assets were from Taiwan, it was difficult for them to get credit from mainland banks. They were also unable to mortgage property.

"If Taiwanese banks could set up mainland branches to offer Renminbi services, it would be more convenient for Taiwanese to show proof of credit, and thus help them develop business there," said Xu Jiadong, who chaired the Taiwan Financial Services Roundtable.