Eight of Taiwan's top-10 commercial banks have applied to open mainland branches and reportedly have received preliminary green lights from their regulators.

Their quest to actually begin doing business here is far from over, however.

Even after approval comes from Taiwan regulators, the banks still need au-thorization from the People's Bank of China, the nation's central bank, a process that may take two to three months.

And even then, the Taiwan banks would be considered to be overseas financial institutions and have to wait for two years to become full-fledged branches and begin serving customers.

Yet another important hurdle remains.

Currently, only overseas banks with assets surpassing US$20 billion can win approval from the central bank to open branches on China's mainland.

"Most banks from Taiwan Province cannot meet this requirement at present," said Zhang Rongfang, spokesman for PBOC's Shanghai branch.

Still, banking officials see the recent easing of mainland investment rules by Taiwan authorities as a sign of progress.

Among the banks that could benefit are the First Commercial Bank, the Land Bank of Taiwan, Taiwan Cooperative Bank, Hua Nan Commercial Bank and Chang Hwa Bank, according to Sun Guoping, who works at Hong Kong-based Shanghai Commercial Bank's Shanghai office.

Because the Taiwan-based Shanghai Commercial and Savings Bank is a shareholder of Shanghai Commercial Bank, Sun said he is the only Taiwan banking staffer who now works on the mainland. He noted that the first positive sign came in May when Taiwan regulators announced they would permit banks to begin the process of opening offices on the mainland.

"With more Taiwan enterprises investing in the mainland, it is necessary for Taiwan banks to go along with them, even though they cannot conduct business there yet," said Sun.

He revealed that most of the Taiwan banks tagged for the first wave have already chosen locations for their mainland offices, mostly in Shanghai, Beijing, Shenzhen and Suzhou.

Until they have authorization to become full-scale branches, the bank offices would be restricted to collecting information and doing research for future business activities.

"The Taiwan banks cannot enjoy preferential polices on setting up offices or branches on the mainland from the central bank because they are treated as overseas banks, like those from Hong Kong, Macau or Europe," said an official at PBOC's Shanghai branch.

Now, business between Taiwan banks and their mainland clients have to go through a third financial institution outside the mainland, such as in Hong Kong or Singapore.

And Taiwan banks that have offshore units can deal directly with mainland branches of overseas banks such as the Citibank and the Hongkong and Shanghai Banking Corp, according to Sun.

Meanwhile, with China's decision to fully open its banking industry to overseas institutions five years after the nation joins the World Trade Organization, Taiwan banks that are in the first wave will gain an early foothold.

(Eastday.com 09/27/2001)