September 3, 2004
The Bureau of Monetary Affairs has raised the ceiling on foreign bank loans to single parties from NT$1 billion or 10% of a total loan, to NT$2 billion or 15% of a total loan.
The new regulations apply to foreign banks in Taiwan with a net worth of NT$300 million or more, with "net worth" defined as including operating capital and retained earnings in Taiwan.
The Bureau of Monetary Affairs notes that the number of foreign bank branches in Taiwan has increased steadily in recent years as financial deregulation has been carried out and the economy has developed. The revised loan ceiling has been instituted to accommodate the expansion of foreign banks, and in consideration of the need for careful oversight.
With approximately NT$400 billion in loans outstanding from foreign banks, the Bureau of Monetary Affairs estimates that loans will increase by NT$20 billion with the new ceiling, which should conform to the practical needs of the banks.
An additional revision to the bureau's current regulations calls on foreign banks to establish internal loan policies and set quotas for loans to different industries, enterprise groups, and other related parties so as to prevent an excessive concentration of loans.
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