Regulations relating to Acquisition by Foreign Banks of Local Banks

Due to the ambiguities in the regulatory framework for supervising banks being acquired by foreign banks, the Financial Supervisory Commission (FSC) has recently clarified its position that within 3 years after acquiring a domestic banking corporation or the time when the total assets thereof has reached 450 billion NT dollars (whichever is earlier), the foreign bank must establish a Taiwan subsidiary company to carry on the business and must not have its branch do the same. The reason for the requirement is that the branch of a foreign bank in Taiwan is regulated in principle by the regulatory authorities and framework in the country where its head office is located, which in the view of the FSC does not suffice given the need of the Taiwan (local) authority to supervise its operations when the business and assets become substantial. The foreign bank, however, can still maintain one branch office in Taiwan to carry on business not covered by its subsidiary.