Tue, May 19, 2020 page12

• FSC, central bank agree on OBU rule

  CURRENCY BENEFITS: Commission chairman Wellington Koo said that as Taiwanese firms’ registrations might not be approved abroad, they could open accounts here

  • By Kao Shih-ching / Staff reporter
  • • 
    • 
    • 

  The Financial Supervisory Commission (FSC) and the central bank reached an agreement allowing local companies to open offshore banking unit (OBU) accounts at domestic banks to borrow foreign currency funds, FSC Chairman Wellington Koo (顧立雄) said yesterday.

  Koo, who is to leave his post to serve as secretary-general of the National Security Council, told a meeting at the Legislative Yuan that he has proposed deregulation since November last year and reached an agreement with the central bank.

  The two agencies are to discuss whether to limit the amount of foreign currency-denominated lending, Koo said.

  

  Financial Supervisory Commission Chairman Wellington Koo speaks to reporters after attending a meeting at the Legislative Yuan in Taipei yesterday.

  Photo: Chien Jung-fong, Taipei Times

  FSC Vice Chairman Huang Tien-mu (黃天牧), who is to become chairman tomorrow, would announce when the deregulation will take effect, Koo said.

  Up to 90 percent of Taiwan-based companies have set up branches or paper companies overseas so they could open accounts at OBUs without breaching the Offshore Banking Act (國際金融業務條例), which only allows overseas companies and individuals to open OBU accounts that accept foreign currency deposits, Koo said.

  “It is fine for big companies [to do that], as they have overseas operations, but for most small and medium-sized enterprises, [pretending to] be foreign companies is like sailing under false colors,” he said.

  Meanwhile, it has become more difficult for local companies without a real overseas business to register a foreign company after Taiwan last year implemented the Common Reporting Standard, which regulates the automatic exchange of information regarding financial accounts on a global level, Koo said.

  “Given that Taiwanese companies’ registrations might not be approved abroad, why do we not let them return and open accounts under our supervision?” he said.

  It would be more convenient for the regulators to monitor the companies’ real beneficiaries, too, he said.

  The deregulation is expected to help domestic firms manage their foreign funds more conveniently and boost local banks’ wealth management business, Koo said.

  The deregulation does not need to amend the existing law, as the Offshore Banking Act allows such operations, but banks’ OBUs do not provide foreign currency funds to domestic firms because regulators do not encourage them to do so, he said.

  The move would likely boost corporate lending in foreign currencies, a privately owned bank’s vice senior president told the Taipei Times by telephone on condition of anonymity.

  “Local companies wanted to open OBU accounts to borrow US dollars, as they face many restrictions when applying for US dollar-denominated loans domestically,” the manager said.

  The central bank, out of concern over fluctuations in foreign exchange rates, requires borrowers to submit documents such as transactions with foreign clients to show why they need foreign currency funds and file repayment plans, he said.

  It would be much more convenient if local companies could directly borrow US dollars through OBU accounts, he said, adding that there would be no foreign exchange risks if companies receive US dollars from foreign clients.
• Most Popular

  • 1

    Taiwan’s fall would be a ‘disaster’: Colby

  • 2

    Taiwan rejects China’s UN claim

  • 3

    China could ‘arrest’ Taiwanese abroad

  • 4

    MAC condemns entertainers’ China posts

  • 5

    What TSMC’s $100 billion investment in the US means for Taiwan