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On 30 June 2004, the Ministry of Finance an-nounced amendments to the Regulations Gov-erning Foreign Bank Branches and Representa-tive Offices. The amendments, affecting Articles 14 and 19, increase the limit on NT-dollar lend-ing to a single borrower by a foreign bank's Taiwan branch. The main points are as follows:
For a branch with a net worth of less than NT$300 million according to its final accounts for the previous accounting period, the maxi-mum NT-dollar lending to a single borrower remains at 10% of its aggregate outstanding NT-dollar lending, or NT$1 billion, whichever is greater. But for a branch with a net worth of NT$300 million or more, the maximum is raised to 15% of its aggregate outstanding NT-dollar lending, or NT$2 billion, whichever is greater. It is explicitly provided that the definition of net worth includes the branch's operating funds and retained earnings in Tai-wan.
To control the lending risk of foreign banks' Taiwan branches, the amended Regulations require foreign banks to establish internal lending policies that set lending limits for different industries, different types of group enterprise, and for interested parties of a single individual or entity.
The liquidity risk management policies to be established by the Taiwan branch of a foreign bank must include an emergency fundraising plan, and must be approved by the bank's headquarters or its regional chief officer.
