Taipei,Oct.15,2012--The implementation of the third-round quantitative easing(QE3)policy in the U.S.has prompted the mainland Chinese branches of Taiwanese banks to change their profit-making strategy,as interbank U.S.-dollar deposit interest in China has plunged to less than 0.3%,from original 3%,forcing the mainland branches to push loaning business,instead of relying on interest income from deposits of their operating funds at mainland Chinese peers.
Before the opening of renminbi businesses,the mainland Chinese branches of Taiwanese banks hold their operating funds in the form of U.S.dollar.Managers of the mainland Chinese branches noted that interests of interbank U.S.-dollar deposits in China plummeted over the past two months,to 0.23%,less than one tenth of the original level of 3.33%.
As a result,the Shanghai branch of First Bank witnessed its monthly earnings decreasing by US$100,000 to US$120,000 a month.In the first nine months this year,the branch raked in pre-tax profits of US$1.59 million,compared with the whole-year goal of US$3.5 million.
A manager of First Bank noted that the five major state banks of mainland China started to dampen interbank U.S.-dollar interest rates in late July and early August.Originally,in greater China region,U.S.-dollar interest was the lowest in Taiwan,somewhat higher in Hong Kong,and the highest in mainland China.Now,U.S.-dollar interest rate becomes the lowest in mainland China.
To cope with the situation,the mainland Chinese branches of Taiwanese banks are striving to boost their loaning business.The Kunshan branch of Chang Hwa Bank extended US$25 million loans in the first half this year but had enhanced the amount to US$50 million by the end of September.
