The Taiwan-based Chinatrust Commercial Bank launched a representative office yesterday in Beijing, making it the first privately-owned bank from the island to establish an office on the mainland.
The office, the fifth representative office to be set up by a Taiwan-based commercial bank on the mainland, is also Chinatrust's 60th office outside Taiwan.
The move is believed to be the first step towards establishing a functioning branch in the mainland market.
"We want to set up a branch in a city where many Taiwan-based enterprises are located," said Jeffrey Koo, chairman and chief executive of the bank.
He said possible sites for branches include Shanghai, Guangzhou, Suzhou, Dongguan and Shenzhen.
Koo said Chinatrust is presently targeting Taiwan-invested firms in the mainland, taking advantage of prior business ties in Taiwan.
"But mainland-based customers will be a top business concern for our bank in the second stage of business expansion," Koo said.
According to regulations, the representative office must undergo a two-year qualifying period before applying to open a branch, During this period, the office can only provide services related to consulting, information gathering and communications.
"With the mainland and Taiwan's accession into the World Trade Organization, there will be more robust and closer cross-Straits business links, which will bring us more opportunities," said Koo.
Since the mainland's opening-up policy was initiated in the late 1970s, cross-Straits' investment and business tie-ups have grown very rapidly, with cross-Straits trade exceeding more than US$40 billion last year - a trend which has created tremendous business opportunities for banks based in Taiwan and on the mainland.
Statistics indicate the mainland market has absorbed investment from Taiwan worth US$180 billion, major investment destinations including Jiangsu, Guangdong, Fujian and Zhejiang provinces and Shanghai Municipality.
This trend has sparked demands for follow-up financial services, especially in the coastal areas where most Taiwan investment is based. However, until mid-2001, no banking institutions were allowed to establish representative offices in the mainland market.
After getting the green light from relevant authorities in Taiwan, a number of Taiwan-based banks filed documents with the People's Bank of China for permission to establish offices in the mainland market.
In May last year, Chang Hwa Bank and the United World Chinese Commercial Bank set up representative offices in Kunshan in East China's Jiangsu Province and Shanghai.
Prior to the move, five insurance firms and 10 securities houses had established representative offices in the mainland market. Most had located their bases in Shanghai - the financial hub of the country.
According to Chinatrust Vice-Chairman Charles Lo, the bank is also eyeing opportunities for business tie-ups with mainland counterparts, with which they can develop business co-operations in a number of areas, such as personal banking, bank cards, capital markets and other derivative products.