TAIWAN Law and Practice Contributed by: James Huang, Eddie Hsiung and Maggie Huang, Lee and Li, Attorneys-at-Law
Regulators – Financial Supervisory Commission (FSC) and CBC The FSC and the CBC are the major regulatory authorities regulating banks in Taiwan. The FSC is the primary competent authority reg - ulating the financial markets and financial insti - tutions in Taiwan. It determines financial policy, issues regulations and rules, conducts financial examinations and supervises financial institu - tions. The FSC has four bureaux: • the Banking Bureau; • the Securities and Futures Bureau; • the Insurance Bureau; and • the Financial Examination Bureau. While the FSC regulates financial markets and financial institutions generally, the Banking Bureau focuses on the banking sector, and the Financial Examination Bureau is in charge of financial examination of all financial institutions regulated by the FSC. The CBC sets monetary policy for regulating the availability of money and credit. It also regulates foreign exchange activities and business, and conducts examinations of banks. 2. Authorisation 2.1 Licences and Application Process Types of Licences According to the Banking Act, banks in Taiwan are categorised into three different types based on the main operations and purposes of the bank: • commercial banks; • banks for a special business purpose; and • investment and trust companies.
Commercial banks are the major and most com - mon type of bank in Taiwan, and their princi - pal function is to accept deposits and extend loans. Banks for a special business purpose are established primarily to facilitate the extension of specialised credit, such as: • agricultural credits; • export-import credits; • credits for medium and small-sized enter - prises; and • real estate credits. However, as such functions may also be per - formed by commercial banks, the establishment of banks for special business purposes has been declining gradually, and most such banks have transformed into commercial banks. Investment and trust companies act as trustee to accept, operate, manage and employ trust funds and manage trust properties, or act as an investment broker to invest in funds and capi - tal markets for specific purposes. There is cur - rently no investment and trust company, as all such companies have transformed or merged into commercial banks. Therefore, the following discussion will focus on commercial banks. In addition, in order to support and promote international financial activities, banks may apply to the FSC and CBC for a licence to estab - lish offshore banking units, which can engage in foreign currency-denominated financing busi - ness in Taiwan without being subject to foreign exchange-related regulations. Also, apart from traditional banks with physical branches, the FSC has agreed to the establish - ment of three online-only banks, which com - menced business in 2021 and 2022.
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