Global banks look to Taiwan expansion in shift away from Hong Kong

[TAIPEI] Taiwan's top financial regulator said global banks are looking to expand on the island after China's passage of a controversial security law in Hong Kong prompted some firms to rethink their Asian strategies.

Some US securities firms are considering an expansion in Taiwan while other international banks plan to start new operations, said Huang Tien-mu, chairperson of Taiwan's Financial Supervisory Commission. He didn't name any of the companies that have expressed interest in Taiwan.

"We aren't trying to replace anyone, but that doesn't mean we have no ambition," Mr Huang said in an interview. "We hope to appeal to the capital and talent from the rest of Asia, not just Hong Kong."

Hong Kong has been embroiled in unprecedented political turbulence after more than a year of anti-government protests, and is now in the cross-hairs of a broader fight between the US and China. The former British colony faces intense competition from cities including Singapore, Shanghai and Tokyo to maintain its status as the key Asian finance hub.

Taiwan's government sees a potential exodus of financial professionals from Hong Kong as a chance to reinvigorate an economy grappling with a peaking population, a shortage of skilled workers and shrinking exports. Its minister for Mainland Affairs Council in July welcomed Hong Kong and multinational companies, establishing an office dedicated to easing immigration.

Foreign banks with the most assets in Taiwan include Citigroup, Standard Chartered and HSBC Holdings, according to financial commission data.

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President Tsai Ing-wen is also looking for concrete measures to help Hong Kong residents after her support for last year's pro-democracy protests contributed to her overwhelming election victory in January. Taiwan saw record immigration and investment from Hong Kong in 2019, a trend that's continued this year. The number of Hong Kongers settling in Taiwan in the first five months of the year almost doubled from the same period in 2019.

Hong Kong's top finance official Paul Chan sought to reassure financial institutions on Sunday that the new national security law doesn't affect their ability to conduct business, allocate capital and trade securities. He also asked regulators to relay the message to brokers, banks and insurers to ease their concerns.

"As long as the financial industry continues to operate normally under the framework of Hong Kong's existing laws, their business operations will continue as usual," Mr Chan said in a blog post.

OFFSHORE ACCOUNTS

Taiwan plans to relax some rules to raise its competitiveness, such as expediting a policy to allow domestic companies to open offshore banking accounts to win back Taiwanese capital from tax havens, Mr Huang said. He would also align the island's financial regulation to international standards to lure foreign investment.

The commission is currently in talks with Nasdaq about cross-listing options once a new trading venue for technology startups and small stocks is in place this year, according to Mr Huang, who took over the job in May. The regulator would also allow more products for financial institutions to cope with low interest rates, including wealth management tools for retirement, and reverse mortgages, Mr Huang said.

Meanwhile, the agency plans to amend local insurance laws to encourage more green investment. Mr Huang said he will also talk to the central bank about insurers and fund managers' need for hedging tools. About two thirds of life insurers' investments were made overseas as of May, according to the Taiwan Insurance Institute.

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