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1.LETTERBUREAU OF MONETARY AFFAIRS, MINISTRY OF FINANCE From : Bureau of Monetary Affairs, Ministry of FinanceRef. No. : Tai-Tsai-Zong (1) Tze89772314 Date : December 5, 2000
2.Amended on November 12, 2002
3.This Ministry's Orders Tai-Tsai-Rong-(1)-Zi-0910054218 of December 12, 2002, Tai-Tsai-Rong-(1)-Zi-0921000866 of November 3, 2003, and Tai-Tsai-Rong-(1)-Zi-0928011810 of December 30, 2003 shall be abrogated immediately as of this date. |
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Article 1
The Directions are issued pursuant to Article 74-1 of the Banking Act.
Article 2
Commercial banks may make the following types of investments in
domestic and foreign securities:
(1) Government bonds.
(2) Short-term notes.
(3) Bank Debentures.
(4) Bonds issued by international or regional financial
organizations.
(5) Shares traded on the Taiwan Stock Exchange or GreTai Securities
Market (domestic shares including listed shares, GreTai traded
shares, emerging stocks issued by an issuer with a credit rating
of at least a certain grade granted by a credit rating
institution approved by the Competent Authority, additional
shares issued by a listed / GreTai traded corporation whose
existing stockholders and employees renounced subscription in
a mandated underwriting case when the bank participated in such
subscription listing with a specific status, and shares
underwritten by a listed / GreTai traded company approved for
listing, certificates of entitlement to new shares, bond
conversion entitlement certificates, and corporate bonds.
(6) Fixed income preferred shares.
(7) Fund beneficiary certificates, stock options, and call/put
warrants issued in accordance with the laws and regulations of
other countries.
(8) Negotiable certificates of deposit and savings bonds issued by
the Central Bank of China.
(9) Beneficiary securities and asset-backed securities.
(10) Private placement shares and private placement corporate bonds
issued by an issuer with a credit rating of at least a certain
grade granted by a credit rating institution approved by the
Competent Authority, and private placement corporate bonds with
a credit rating of at least a certain grade granted by a credit
rating institution approved by the Competent Authority.
(11) Other securities approved by the Competent Authority
Shares under Subparagraph 5 of the Preceding Paragraph do not include
changing trading method securities designated in the “ Operating Rules
of The Taiwan Stock Exchange Corporation” and “GreTai Securities
Market Rules Governing Securities Trading on Over-the-Counter
Markets” or OTC traded management shares designated in the “ROC
Over-the-Counter Securities Exchange Criteria Governing Review of
Securities Traded on Over-the-Counter Markets”.
The securities in Paragraph 1 do not include those securities issued
by the government and corporate in the Mainland China Area.
Article 3
The limits on the amount of domestic and foreign securities in which
a commercial bank may invest are as follows:
(1) The aggregate outstanding amount of the original acquisition cost
of those shares, certificates of entitlement to new shares, fixed
income preferred shares, private placement shares, private
placement corporate bonds, and fund beneficiary certificates,
stock options, and call/put warrants issued in accordance with the
laws and regulations of various countries and t raded on the Taiwan
Stock Exchange or GreTai Securities Market purchased by a
commercial bank as investments may not exceed 25% of the
calculation basis of the commercial bank. However, the aggregate
outstanding amount of the original acquisition cost of those
shares, stock options, call/put warrants, certificates of
entitlement to new shares, fixed income preferred shares,
privately raised shares, and private placement corporate bonds
traded on the GreTai market may not exceed 5% of the calculation
basis of the commercial bank.
(2) The aggregate outstanding amount of the original acquisition cost
of those short-term notes (excluding treasury bills and negotiable
certificates of deposit), bank debentures, corporate bonds,
beneficiary securities, and asset-backed securities that are
unrated or whose credit rating granted by a credit rating
institution approved by the Competent Authority fails to meet a
certain grade purchased by a commercial bank as investments may
not exceed 10% of the calculation basis of the commercial bank.
However, when short-term notes, bank debentures, or corporate
bonds have no credit rating, but the credit rating of their issuer,
guarantor, or acceptor is at least the foregoing grade, or if
beneficiary securities or asset-backed securities have no credit
rating but the credit rating of their guarantor is at least the
foregoing grade, they shall not be subject to this restriction.
(3) The total balance of those securities listed in Paragraph 1 of
Article 2 purchased by a commercial bank as investments, except
bonds issued by the National Government, treasury bills, and
negotiable certificates of time deposit and savings bonds issued
by the Central Bank of China, may not exceed 25% of the sum of its
total balance of deposits and value of issued bank debentures.
(4) Pursuant to Article 71 of the Securities and Exchange Act, the
securities purchased by those banks that concurrently engage in
securities trading shall count towards the limits on securities
purchased as investments specified in the preceding Subparagraphs
(1) to (3) if the securities have not been sold one year after their
purchase.
(5) The total value of short-term notes and bonds purchased by a bank
with re-sell conditions shall not count towards the limits on
securities purchased as investments specified in the preceding
Subparagraphs (1) to (3). However, those short-term notes and
bonds sold with buy-back conditions shall count towards the
foregoing limits.
(6) The total number of shares, certificates of entitlement to new
shares, and bond conversion entitlement certificates of a single
company purchased by a commercial bank as an investment may not
exceed 5% of that company's total number of issued shares.
The term "calculation basis" as used in Subparagraphs (1) and (2) of
the preceding Paragraph shall mean the bank's finalized net worth as
of the end of the previous fiscal year less and subtracting the
following Subparagraphs. However, those banks that increase cash
capital during the fiscal year are permitted to include the additional
capital in the calculation basis, and shall use the day when they have
obtained the capital attestation certificate as the calculation base
day. If a bank that issues cash dividends during the fiscal year, the
value of those dividends shall be subtracted from the calculated base
number on the distribution base day:
(1) If a bank holds the shares of another bank for more than one year,
the original acquisition cost shall be subtracted. However,
reinvestment in an overseas subsidiary bank shall not be subject
to this restriction.
(2) The original acquisition cost of the shares of other enterprises
other than banks in which the bank has made a reinvestment after
approval by the Competent Authority or in accordance with other
regulations shall be subtracted.
The "total balance of deposits" under the preceding Subparagraphs (3),
Paragraph 1 includes demand deposits, time deposits, checking deposits,
Chunghwa Post Co., Ltd. transfer deposits, and foreign currency
deposits.
Article 4
Investments by a commercial bank in securities with credit rating of
at least a certain grade granted by a credit rating institution
approved by the Competent Authority shall mean that one of the
following circumstances applies:
(1) Standard & Poor's Corp. has given the securities a short-term
credit rating of A -3 or above or a long-term credit rating of BBB-
or above.
(2) Moody's Investors Service has given the securities a short-term
credit rating of P -3 or above or a long-term credit rating of Baa3
or above.
(3) Fitch Inc. has given the securities a short-term credit rating of
F3 or above or a long-term credit rating of BBB- or above.
(4) Taiwan Ratings Corp. has given the securities a short-term credit
rating of twA-3 or above or a long-term credit rating of twBBB-
or above.
(5) Fitch International's Taiwan subsidiary has given the securities
a short-term credit rating of F3(twn) or above or a long-term
credit rating of BBB-(twn) or above.
(6) Moody's Credit Rating Co., Ltd. has given the securities a
short-term credit rating of TW-3 or above or a long-term credit
rating of Baa3.tw or above.
Article 5
A commercial bank may not invest in shares, certificates of entitlement
to new shares, bond conversion entitlement certificates, corporate
bonds, short-term notes, fund beneficiary certificates or fixed income
preferred shares of a company in which the bank's responsible person
acts as a director, supervisor, or manager. However, the following
shall not be subject to this restriction:
(1) Bank debentures (including subordinate bank debentures).
(2) Corporate bonds guaranteed by another bank.
(3) Short-term notes guaranteed or accepted by another bank and
underwritten or traded by other bills finance companies.
(4) Negotiable certificates of deposit issued by the bank.
(5) Beneficiary securities and asset-backed securities with an issue
maturity of less than one year.
(6) The shares, certificates of entitlement to new shares, bond
conversion entitlement certificates of those companies with which
the bank has established an investment relationship in accordance
with Article 74 of the Banking Act and has the approval of the
Competent Authority to assign its responsible person as a director,
supervisor, or manager.
Article 6
A commercial bank that acts as an originator institution (principal),
trustee institution, or stockholder of a special-purpose company in
accordance with the Financial Asset Securitization Act or Real Estate
Securitization Act may not invest in the following beneficiary
securities or asset-backed securities:
(1) A bank that serves as an originator institution (principal) may
not invest in any beneficiary securities or asset-backed
securities that have been issued with the bank's financial assets,
real estate, or real estate-related rights as their underlying
assets.
(2) A bank that serves as a trustee institution may not invest in
beneficiary securities issued by itself.
(3) A bank that serves as a stockholder of a special-purpose company
may not invest in asset-backed securities issued by a
special-purpose company established by itself.
Article 7
If a bank's offshore banking branch invests in foreign currency
securities, such investment shall be conducted subject to in Article
9 of the Regulations Governing Offshore Banking Branches, and the
investment shall be counted into the securities investment limit
prescribed in Article 3.
Article 8
If the Competent Authority approves a commercial bank to invest in
other corporate shares pursuant to Article 74 of the Banking Act, the
amount of investment shall not be counted into the securities
investment limit prescribed in Article 3.
Article 9
If a commercial bank serves as a n originator institution in accordance
with the Financial Asset Securitization Act holds beneficiary
securities or asset-backed securities that have been issued with the
bank's financial assets as their underlying assets for the purpose of
credit enforcement, such investments shall be conducted in accordance
with relevant regulations prescribed by the Competent Authority.
If the translations of the texts differ from the original Chinese texts, the
original texts are preferential.
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