Restrictions Relaxed for the Acceptance of NT Dollar Collateral by OBUs

On July 11, 2007 , the Central Bank relaxed restrictions on the extension of credit by offshore banking units (OBUs) by allowing them to accept NT Dollar collateral as security for loans. This will strengthen the global competitiveness of Taiwan ’s OBUs by adding greater diversity to their business and expanding the scale of their operations.

In a letter to the Bankers Association and the Financial Supervisory Commission, the Central Bank stated that OBUs would be allowed to accept domestic and foreign stocks, real estate, and other NT Dollar assets as collateral for foreign-currency loans. When a borrower is unable to repay a loan and the lender has to take over such collateral, the related exchange between the NT Dollar and foreign currency may be handled by the overseas headquarters of the bank involved or its branch in Taiwan in accordance with the provisions of Paragraph 1, Subparagraph 3 of Article 4, or the provisions of Article 6, of the “Regulations Governing the Declaration of Foreign Exchange Receipts and Disbursements or Transactions”.

The Central Bank emphasizes that this liberalization does not apply to cross-straits credit operations, and that collateral for foreign-currency cross-straits loans extended by

Taiwan

’s OBUs will continue to be governed by the provisions of the “Regulations Governing Approval of Banks to Engage in Financial Activities Between the Taiwan Area and the Mainland Area”. For more related information, please consult this website: http://www.cbc.gov.tw/foreign/legal/minfo_detail.asp?no=4&no2=159.

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