This website uses cookies to improve your browsing experience. By continuing to use this website you agree to our use of cookies. For more information on our use of cookies, click here to review the Cookies Policy.。
Article 12 of the Banking Act provides that bank guarantees are included in the collateral that a bank is allowed to accept. Further, according to paragraph 2 of Article 2 of the Enforcement Rules of the Banking Act, the so-called bank guarantees include guarantees provided by foreign financial institutions approved by the regulators. However, financial institutions in Mainland China and their overseas branches fall out of the scope of "foreign financial institution" pursuant to a regulatory ruling in 2001.
After the amendments to the "Regulations Governing the Banking Activity and the Establishment and the Investment by Financial Institution between the Taiwan Area and the Mainland Area" in September 2011, the offshore banking units and overseas branches of a Taiwan bank may extend loans to PRC companies. To mitigate credit risk exposures of Taiwan banks and facilitate Taiwan banks to expand business in Mainland China, the Financial Supervisory Commission issued a new ruling on 27 September 2011. Under the new ruling, Taiwan banks are allowed to accept guarantees extended by a financial institution in Mainland China or its overseas branches as collateral if such Mainland China financial institution or its overseas branches (i) have a branch in Taiwan; or (ii) if they don't have any branch in Taiwan, the value of their total assets or capital ranks among the top 1,000 in the world and have superior credit ratings.
