TAIPEI, July 2 (Reuters) - Taiwan is planning to allow its companies to sell bonds denominated in China’s yuan currency to help them with fund-raising efforts, in the latest step to boost lagging financial sector ties with political rival China.
Taiwan companies will be able to issue the bonds via the specialist overseas business units of Taiwanese banks, or via the banks’ Hong Kong branches, Financial Supervisory Commission (FSC) Chairman Chen Yuh-Chang said in a statement on Sunday. He did not elaborate further.
The plan is part of the FSC’s broader scheme to improve cross-strait banking ties, which have showed only gradual and small progress since 2008, lagging behind other business sectors, due to fears of strong influence by powerful mainland banks in Taiwan’s banking market.
The two sides are still discussing setting up a yuan clearing system, which would allow Taiwanese banks to grab a role in the internationalisation of the yuan and speed up money transfers between the two trading partners.
The FSC gave approval last month for Bank of China and Bank of Communications to set up a branch each in Taipei, the first by Chinese banks on the island.
In another nudge towards better ties, the FSC also said it would allow asset management firms to invest up to 100 percent of their assets under management in China from the current 30 percent allowed. It did not elaborateor give any time frame for the plans.
News of the plans helped the financial sub-index rise 1.48 percent on Monday, beating the broader market’s 0.78 precent gain. (Reporting by Faith Hung; editing by Jonathan Standing)