Taiwan firms to gain under measures
By Zhang Fengming |
March 23, 2010, Tuesday
|
Print Edition
Print Edition
TAIWAN-BASED financial institutions stand to benefit more from the new business and investment measures between the Chinese mainland and the island over the long term while mainland companies will only see minimal gains, Moody's Investors Service said yesterday.
"Taiwan-based financial institutions will get improved flexibility as investment limits are gradually lifted," Sally Yim, vice president and senior analyst at Moody's, said yesterday in a report.
The Financial Supervisory Commission of Taiwan issued new measures governing business dealings and investments between the island and mainland in the financial services, securities and insurance industries last week.
Under the measures, the FSC will allow Taiwan banks to enter the mainland by establishing branches, subsidiaries, or direct investments.
The measures also allow mainland banks to set up representative offices or branches in Taiwan. At this stage, mainland entities cannot invest directly in Taiwan's banks.
"Taiwan-based banks will be able to tap growth opportunities and better profit margins. Insurers will gain better control of their mainland subsidiaries, and avail themselves of fresh capital for their businesses," Yim said.
On the other hand, the gains for mainland financial institutions are minimal because of limits placed on their investments in Taiwan, she added.
"Their (Taiwan banks) entry to the mainland will provide new sources of earnings and diversification benefits, supplementing the limited growth available on the island," Yim said.
Given the low profit margins and limited growth available in Taiwan compared to the mainland, the island does not look so attractive for mainland banks, she said.
"Taiwan-based financial institutions will get improved flexibility as investment limits are gradually lifted," Sally Yim, vice president and senior analyst at Moody's, said yesterday in a report.
The Financial Supervisory Commission of Taiwan issued new measures governing business dealings and investments between the island and mainland in the financial services, securities and insurance industries last week.
Under the measures, the FSC will allow Taiwan banks to enter the mainland by establishing branches, subsidiaries, or direct investments.
The measures also allow mainland banks to set up representative offices or branches in Taiwan. At this stage, mainland entities cannot invest directly in Taiwan's banks.
"Taiwan-based banks will be able to tap growth opportunities and better profit margins. Insurers will gain better control of their mainland subsidiaries, and avail themselves of fresh capital for their businesses," Yim said.
On the other hand, the gains for mainland financial institutions are minimal because of limits placed on their investments in Taiwan, she added.
"Their (Taiwan banks) entry to the mainland will provide new sources of earnings and diversification benefits, supplementing the limited growth available on the island," Yim said.
Given the low profit margins and limited growth available in Taiwan compared to the mainland, the island does not look so attractive for mainland banks, she said.
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