TAIPEI: Details on the setting up of footholds by banks in Taiwan and the mainland on the opposite sides of the Taiwan Straits could be discussed after memorandums of understanding (MOUs) on financial supervisory cooperation between the two sides come into effect, Taiwan's chief financial regulator said yesterday.

Financial Supervisory Commission (FSC) Chairman Sean Chen told lawmakers at the Legislative Yuan that the number of foothold and equality issues concerning setting up operations by Taiwan and mainland banks could be negotiated after the MOUs become effective January 15 next year, but are not suitable for inclusion on the agenda for talks on a proposed bilateral economic cooperation framework agreement (ECFA).

Taiwan and the mainland will develop their own respective standards for their banks to follow when establishing footholds across the Straits, according to Chen.

Local banks that want to set up operations on the mainland will need to be listed as "good" after factoring in their capital adequacy ratios, non-performing loan (NPL) ratios and NPL coverage ratios, Chen noted.

As for a currency settlement system pact between Taiwan and the mainland slated to be signed before the proposed ECFA is sealed, Chen said that in the initial stage, banks on both sides will first provide services for the conversion of Taiwan and mainland currencies in cash, and then later provide bank account services.

Taiwan's top negotiator with the mainland - Straits Exchange Foundation (SEF) Chairman Chiang Pin-kung - said a day earlier that issues concerning market access for financial institutions on either side are expected to be brought up in the fifth round of talks between himself and Beijing's top Taiwan negotiator, Chen Yunlin.

However, Chen had a differing view, saying that it is still too early to speculate on the matter, adding that whether the issues will be put on the agenda will be known only after their fourth round of talks conclude later in December.

Asked about when banks in Taiwan will be allowed to provide yuan (RMB) deposit services, Chen said only that the time will be ripe after the number of mainland visitors to Taiwan "reaches a certain level."

China Daily/CNA

(HK Edition 12/03/2009 page2)