Introduction Of The Amendments Of Law Relating To The Taiwan Green Finance Being Promoted By Taiwan Financial Supervisory Commission.
Legal News & Analysis - Asia Pacific - Taiwan - Energy & Project Finance - Banking & Finance
25 May, 2018
In response to the demand for foreign bank branches to expand their participation in renewable energy industry, offshore wind-power industry and other infrastructures, the Taiwan Financial Supervisory Commission (“FSC”), having evaluated the impact on Taiwan financial market and associated risks factors, amended Article 14 and Article 19-3 of the Regulations Governing Foreign Bank Branches And Representative Offices (hereinafter “the Foreign Bank Regulations”) to appropriately ease the restrictions on the credit limit and the total amount of loans.
Amended Article 14 of the Foreign Bank Regulations provides that the NTD credit that a foreign bank branch may extend to a same juristic person, same related party or the same affiliates should not exceed NTD 7 billion respectively or twice the amount of foreign bank branch’s net worth. Amended Article 19-3 of the Foreign Bank Regulations provides that when a foreign bank branch’s retail deposit business does not reach the specific thresholds, such branch’s outstanding NTD loans shall not be more than forty (40) times the branch’s net worth after the accounting books are closed at the end of the previous fiscal year.
Offshore wind-power building is long-term project financing. While foreign banks generally have abundant knowledge and experience in long-term project financing, it is relatively more difficult for foreign bank branches to collect NTD savings since they operate fewer places of business in Taiwan.
Therefore, the FSC enacted Regulations Governing Issuance of Bank Debentures denominated in NTD by Foreign Bank Branches (hereinafter the “Bank Debentures by Foreign Bank Branches Regulations”) to enable foreign bank branches to issue Bank Debentures denominated in NTD to make up for the shortfall of medium and long-term funding.
The FSC also looks forward to introducing foreign banks’ knowledge and experience in long-term project financing regarding offshore wind-power building and promoting the cooperation of foreign banks and local banks. As a result, the finance demand of Green Energy could be met.
The following are some of the highlights in the Bank Debentures by Foreign Bank Branches Regulations:
- The term “Bank Debentures” as used in the Regulations shall mean general Bank Debentures, subordinated Bank Debentures and other Bank Debentures approved by the competent authority. Convertible Bank Debentures, exchangeable Bank Debentures are exclusive.
- Proceeds from the issue shall be applied to financing investment in renewable energy industry, offshore wind-power industry and other infrastructure within Taiwan and shall not be converted into foreign exchange for using.
- The Bank Debentures by foreign bank are restricted to be offered to professional investors only.
For further information, please contact:
Steven Yen, Tsar & Tsai Law Firm