Data Source:Laws and Regulations Retrieving System of the Banking Bureau

Regulations Governing the Establishment, Relocation, or Closure of Domestic Branches by Financial Institutions

Articles 2 and 8 amended and promulgated on 13 April 1995 per Order No. Tai-Tsai-Rong-(84)-84712488 of the Ministry of Finance

Article 1
These Regulations are adopted in accordance with the provisions of Article 57, paragraph 3, of the Banking Act.

Article 2
Provisions regarding the number of additional branches that a financial institution may apply to establish per year are as follows, provided that those with excellent business performance and sound business operations that are also well coordinated with financial policy implementation may increase by one the number of additional branches for which they apply:
1. A bank may not establish more than five additional branches.
2. A trust investment company may not establish more than two additional branch offices.
3. A credit cooperative may not establish more than two additional branch cooperatives. However, for a credit cooperative located in a municipality directly under the jurisdiction of the Central Government, the aggregate number of branch cooperatives may not be more than eighteen; for those located in a provincial municipality, the aggregate number of branch cooperatives may not be more than eleven; for those located in a county municipality, rural township, or urban township, the aggregate number of branch cooperatives may not be more than nine.
4. The number of additional branches established by farmers' association credit departments and fishermen's association credit departments may not be more than two; those whose aggregate number of branches has already reached nine may not apply. However, those involved in a merger case may establish additional branches with special approval from the Ministry of Finance upon consideration of the local economic and financial circumstances, and the business and financial performances of the credit department itself.

The location of an additional branch for which a financial institution has applied in accordance with the preceding paragraph shall meet the following requirements:
1. Where a bank's business territory is restricted by the Ministry of Finance, the additional branch is established within that territory.
2. The additional branch established by a credit cooperative is within the business territory in which it is registered.
3. The additional branch established by a farmers' association credit department is within the business territory in which it is registered; provided, a farmers' association credit department located in a municipality directly under the jurisdiction of the Central Government or in a provincial municipality that wishes to establish an additional branch shall apply to the Ministry of Finance for special project approval with consideration to the agricultural conditions in the given area.
4. The additional branch established by a fishermen's association credit department is located in a fishing port, fish cultivation zone, or fish market production area within the business territory in which the fishermen's association credit department is registered.

Article 3
The Ministry of Finance may restrict financial institutions applying to establish additional branches upon consideration of the domestic economic or financial situation.

The application of a financial institution for approval to establish additional branches at which the following circumstances exist shall be denied or the number of branches reduced:
1. Where the financial institution has been subject to disposition due to violation of any financial acts or regulations in the past year.
2. Where the responsible persons have willfully committed individual occupational crimes for which they have been convicted in the past year.
3. Where an incident of fraud has occurred in the past year that was not reported in accordance with regulations, or the fraud was serious.
4. Where the Competent Authority or the Central Bank of China has issued an official reprimand and ordered corrective action to remedy a deficiency, but the situation has not shown improvement.
5. Where the final accounting report for the previous fiscal year shows a deficit or accumulated deficit. However, the calculation standards for the credit department of a fishermen's association or farmers' association are the calculations from the final accounting of the association itself.
6. Where a bank's ratio of equity capital to risk-based assets is less than eight percent, or the community financial institution's net worth is not adequate to its assets.
7. Where negligence in regards to security maintenance has caused a security incident.
8. Where the branch operations plan is clearly inadequate or unsound, or the qualifications of the designated responsible persons do not meet the requirements of the Ministry of Finance.
9. Where other facts indicate a likelihood of obstructions to sound business operation or an inability to comply with government policy requirements.

Article 4
When a financial institution applies to relocate a branch, the area to which the branch is relocated shall comply with the provisions of Article 2, paragraph 2, herein. However, the relocation of a bank or trust investment company is limited to the same municipality directly under the jurisdiction of the Central Government, provincial municipality, or county of its original address, except for exceptional reasons and with the special approval of the Ministry of Finance.

Article 5
A financial institution that applies to establish additional branches shall fill out the application in accordance with the provisions of the Ministry of Finance, and submit it together with a business plan for branches to be established, either in September each year for those using the fiscal-year system, or in March each year for those using the calendar-year system.

Article 6
A financial institution that applies to relocate a branch shall fill out the application in accordance with the provisions of the Ministry of Finance and submit it together with the relocation plan.

The relocation plan referred to in the preceding paragraph shall include the following:
1. Main reasons for relocation.
2. The distribution of financial institutions (including post offices) in the area surrounding the new branch location.
3. How the rights and obligations of existing customers will be handled, or other substitute service methods.
4. A business plan for the new business location.
5. The branch's balance sheets and income statements for the past 3 years.
6. A comparative analysis of the branch's business situation for the past 3 years, and the 3 years after relocation.

Article 7
A financial institution applying to close a branch shall fill out the application in accordance with the provisions of the Ministry of Finance and submit it together with the closure plan.

The closure plan referred to in the preceding paragraph shall include the following:
1. Main reasons for closing the branch.
2. The distribution of financial institutions (including post offices) in the area surrounding the branch location.
3. How the rights and obligations of existing customers will be handled, or other substitute service methods.
4. The branch's balance sheets and income statements, and analysis of its business status, for the past three years.

Article 8
A financial institution that receives approval to establish, or relocate, a branch shall apply to the Ministry of Finance to issue or reissue the business license and commence business operations within one year from the date of approval. If a branch does not commence operations within that time limit, its approval shall be revoked. One that is closing a branch shall, within the same time limit, surrender the business license and cease business operations. A financial institution that is adding, relocating, or closing a branch institution shall report in advance to the Ministry of Finance for recordation before beginning or ceasing business operations.

Article 9
These Regulations shall enter into force from the date of promulgation.