Bank of China, ICBC to establish presence in Taiwan

The two banks agree  to grab opportunity of improving China-Taiwan relations to expand business.

Bank of China, the nation's third-largest lender, said 17 November it will apply to open a branch. ICBC, the world’s most profitable bank, needs a presence in Taiwan and wants to expand there, Chairman Jiang Jianqing said on 13 November.

The accord deepens financial ties with an island that has accounted for as much as $200 billion of investment in mainland China and has 100,000 companies operating there. It also paves the way for a broader economic agreement as relations between the two sides reach their warmest since a civil war ended 60 years ago.

"This is a big step on the political side and Chinese banks are keen to show their support," said Li Qing, an analyst at CSC Securities HK Ltd in a report in Bloomberg. "The reality is the Taiwan market is too small and saturated for China players to care much about. It's more meaningful for the Taiwan counterparts who can expand in a much bigger market."

An agreement with China may help Taiwan's drive to consolidate the island's 37 domestic banks. On 12 November, the island's regulator issued draft rules to tighten requirements for branches of foreign banks in anticipation of Chinese lenders coming to Taiwan.