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Taiwan: Just what Asia needs - industrial banks

Something strange is happening in the Taiwanese banking sector. Despite the ministry of finance having stated its aim of allowing banks a universal remit, it is now planning to issue industrial banking licences. As Rachel Wu, banking analyst at Warburg Dillon Read in Taipei points out: "Industrial banks create another niche within the financial sector." Acting as an industrial bank in Taiwan entitles the licence holder to arrange a variety of funding instruments for corporates including commercial paper and to undertake venture capital projects. To date, only state-run Chiao Tung Bank has such a license.

Three institutions initiated by leading conglomerates are expected to have applied for the new licences before the July 28 deadline. Industrial Bank of Taiwan (IBT), backed by big names in Taiwan's manufacturing and service sectors, plans to launch full-scale operations in July 1999 if given the green light by the finance ministry. It has already raised NT$23 billion ($669 million) from its backers, a little over the minimum floor capitalization of NT$20 billion, ,

The Fuban Insurance Group is likely to get a licence according to a Taipei-based banking analyst. So too will China Development Corporation (CDC), technically a trust company, but to all intents and purposes Taiwan's top investment bank.

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