A Taiwan bank that meets the following requirements may apply to the Competent Authority for approval to establish a branch in Mainland Area:
1. The bank is in compliance with the law, is soundly managed and has not been subject to any disciplinary action, or has been subject to disciplinary action but specific remedial actions have been taken therefor and accepted by the Competent Authority within three (3) years prior to application;
2. The bank’s ratio of equity capital to risk-weighted assets is 10% or higher during the latest fiscal half year;
3. The bank’s non-performing loan ratio is 2% or lower during the latest fiscal half year;
4. The bank’s loan loss coverage ratio is 60% or higher during the latest fiscal half year;
5. The bank has international financial knowledge and experience; and
6. The bank has established a branch and operated business in a member country of OECD for five years or longer, and said branch is free of major regulatory violation and free of remedial actions to be taken for deficiencies found in a financial examination within one year prior to application.
If a third-area subsidiary bank meets the requirements set forth in subparagraphs 1 to 5 of the preceding paragraph, its Taiwan parent company may apply to the Competent Authority for approval for said third-area subsidiary bank to establish a branch in Mainland Area.

A Taiwan bank intending to establish a branch in Mainland Area shall submit the following documents to the Competent Authority for approval:
1. Application;
2. A feasibility study;
3. Business plan;
4. Minutes of the board resolution;
5. Financial reports for the last three (3) years;
6. A calculation worksheet for its ratio of equity capital to risk-weighted assets for the latest fiscal half year;
7. Documents verifying that the proposed branch manager meets the qualification requirements set forth in Paragraph 2 hereof;
8. The internal control and audit systems, operations management, and performance evaluation method for the branch to be established in Mainland Area;
9. The operational and regulatory compliance status of the established third-area branches; and
10. Such other information or documents as may be required by the Competent Authority.
The proposed branch manager mentioned in the preceding paragraph should have good moral character and professional leadership ability, is free of the situations set forth in Article 3 of the Regulations Governing Qualification Requirements, and complies with the provisions in Paragraph 3 Article 3-1 and Paragraph 1, Article 6 of the same Regulations.
When a third-area subsidiary bank intends to establish a branch in Mainland Area, its Taiwan parent company shall submit the following documents to the Competent Authority for approval:
1. Application;
2. A feasibility study;
3. Business plan;
4. Minutes of the board resolution of both the parent company and the third-area subsidiary bank;
5. A calculation worksheet for the ratio of equity capital to risk-weighted assets of the third-area subsidiary bank for the latest fiscal half year;
6. The internal control and audit systems, operations management, and performance evaluation method of the third-area subsidiary bank for the branch to be established in Mainland Area; and
7. Such other information or documents as may be required by the Competent Authority.

A Taiwan bank that already has branches in Mainland China and meets the requirements set forth in Subparagraphs 1 to 4, Paragraph 1 of Article 25 herein may submit documents set out in Subparagraphs 1 to 7, Paragraph 1 of the preceding article, and in addition, submit the following documents, to the Competent Authority for approval to establish an additional branch in Mainland Area:
1. The number of existing branches in Mainland Area and analysis of their operating status;
2. The findings and comments given by the head office and the financial authority in Mainland Area in the latest examination of its branch(es) in Mainland Area; and
3. Such other information or documents as may be required by the Competent Authority.
If a third-area subsidiary bank that already has branches in Mainland China and meets the requirements set forth in Subparagraphs 1 to 4, Paragraph 1 of Article 25 herein, its Taiwan parent company may submit documents set out in Subparagraphs 1 to 5, Paragraph 3 of the preceding article, and in addition, submit the following documents to the Competent Authority for approval to establish an additional branch in Mainland Area:
1. The number of existing branches in Mainland Area of the said third-area subsidiary bank and analysis of their operating status;
2. The findings and comments given by the said third-area subsidiary bank and the financial authority in Mainland Area in the latest examination of its branch(es) in Mainland Area; and
3. Such other information or documents as may be required by the Competent Authority.

A Taiwan bank must have obtained the approval of the Competent Authority before applying to [the financial authority in] Mainland Area for the establishment of a branch. When the Taiwan bank replaces its proposed branch manager, the bank shall submit documents verifying that the new branch manager meets the qualification requirements set forth in Paragraph 2 of Article 26 to the Competent Authority for approval; when the Taiwan bank changes the planned operating capital for or the planned address of its branch office, the bank shall submit relevant documents to the Competent Authority for approval.
A Taiwan bank shall promptly inform the Competent Authority after obtaining approval from the financial authority in Mainland Area [to establish a branch] and submit the following documents to the Competent Authority for recordation before the branch commences business:
1. An approval letter from the financial authority in Mainland Area;
2. Business items approved for operation by the financial authority in Mainland Area;
3. Planned date for commencement of business and detailed address [of the branch];
4. Name of branch manager; and
5. Such other information or documents as may be required by the Competent Authority.
When a Taiwan bank intends to close its branch in Mainland Area, the bank shall first obtain approval from the Competent Authority before applying to the financial authority in Mainland Area, and promptly inform the Competent Authority after obtaining approval from the financial authority in Mainland Area [to close a branch]. The Taiwan bank shall also submit the approval letter from the financial authority in Mainland Area and the planned closing date to the Competent Authority for recordation before closing the branch.
A Taiwan parent company must have obtained the approval of the Competent Authority before its third-area subsidiary bank may apply to [the financial authority in] Mainland Area for the establishment of a branch. The Taiwan parent company shall promptly inform the Competent Authority after obtaining approval from the financial authority in Mainland Area [to establish a branch], and submit the documents set out in Subparagraphs 1 to 3 of Paragraph 2 hereof to the Competent Authority for recordation before the branch commences business.
The provisions in Paragraph 3 hereof apply mutatis mutandis to a Taiwan parent company when its third-area subsidiary bank intends to close its branch in Mainland Area.

A Taiwan bank may apply to the Competent Authority for approval to establish a sub-branch under its branch in Mainland Area, provided its existing branch in Mainland Area has not been subject to any disciplinary action, or has been subject to disciplinary action but specific remedial actions have been taken therefor and accepted by the Competent Authority.
A Taiwan bank intending to set up a sub-branch under its branch in Mainland Area shall submit the following documents to the Competent Authority for approval:
1. Application;
2. A feasibility study;
3. Business plan;
4. Minutes of the board resolution;
5. Analysis of the operating status of the branch the planned sub-branch will be under;
6. The internal control and audit systems, operations management, and performance evaluation method for the sub-branch; and
7. Such other information or documents as may be required by the Competent Authority.
A Taiwan bank must have obtained the approval of the Competent Authority before applying to [the financial authority in] Mainland Area for the establishment of a sub-branch, and promptly inform the Competent Authority after obtaining approval from the financial authority in Mainland Area. The preceding provisions apply when a Taiwan bank closes its sub-branch in Mainland Area.
A Taiwan bank shall submit the following documents to the Competent Authority for recordation before a sub-branch commences business:
1. An approval letter from the financial authority in Mainland Area;
2. Business items approved for operation by the financial authority in Mainland Area;
3. Planned date for commencement of business and detailed address [of the sub-branch]; and
4. Such other information or documents as may be required by the Competent Authority.

When a third-area subsidiary bank intends to establish a sub-branch under its branch in Mainland Area, its Taiwan parent company shall report to the Competent Authority in advance for recordation before applying to [the financial authority] in Mainland Area. The preceding provision applies to the closure of a sub-branch in Mainland Area. Before a sub-branch commences business, the Taiwan parent company shall submit the documents set out in Paragraph 4 of the preceding article to the Competent Authority for recordation.

A Taiwan bank that intends to increase the operating capital of its branch in Mainland Area must first obtain approval from the Competent Authority.
When a third-area subsidiary bank intends to increase the operating capital of its branch in Mainland Area, its Taiwan parent company must first obtain approval from the Competent Authority.

Taiwan banks with branch or sub-branch in Mainland Area shall comply with the following provisions:
1. The bank shall first obtain approval from the Competent Authority if the businesses of its branch or sub-branch do not comply with the financial regulations in Taiwan Area;
2. If the branch or sub-branch has a material contingent or fraud incident, the bank shall handle and report it according to the provisions set forth by the Competent Authority;
3. If the branch or sub-branch changes its business address or business items, the bank shall report to the Competent Authority in advance for recordation;
4. When the branch or sub-branch reports to the financial authority in Mainland Area according to the local financial regulations, the bank shall promptly report same to the Competent Authority for recordation;
5. The bank shall input the basic and operating information of the branch and sub-branch into an information reporting system designated by the Competent Authority;
6. The branch and sub-branch shall undertake internal audits in accordance with the Implementation Rules of Internal Audit and Internal Control System of Financial Holding Companies and Banking Industries. The bank shall submit the business audit report, independent auditor’s report, and financial examination report on its branch or sub-branch prepared by the financial authority in Mainland Area to the Competent Authority for recordation;
7. The bank shall prepare consolidated financial statement including the branch and sub-branch in Mainland Area along with other offshore branches of the bank and submit same to the Competent Authority for recordation in accordance with Article 49 of the Banking Act; and
8. Before replacing the branch manager, the bank shall first submit documents verifying that the new branch manager meets the qualification requirements set forth in Paragraph 2 of Article 26 herein to the Competent Authority for approval.
The provisions in the preceding paragraph apply mutatis mutandis to third-area subsidiary banks with branch and sub-branch in Mainland China, and the situation under Subparagraph 1 of the preceding paragraph require ex-ante reporting to the Competent Authority for recordation.

Deleted.

A Taiwan bank shall promptly report to the Competent Authority if its branch in Mainland Area incurs losses. If the losses incurred exceed one third (1/3) of the branch’s operating capital, the Competent Authority may order the Taiwan bank to propose a business improvement plan for the branch and report the status of improvement periodically.
Where the financial conditions of the branch in Mainland Area as referred to in the preceding paragraph deteriorates significantly that the sound operation of the Taiwan bank might be adversely affected, the Competent Authority may order the Taiwan bank to close its branch in Mainland Area or take other necessary measures against the Taiwan bank pursuant to the Banking Act.
A Taiwan parent company shall promptly report to the Competent Authority if the branch of its third-area subsidiary bank in Mainland Area has a situation as described in Paragraph 1 hereof. Where the financial conditions of the branch in Mainland Area deteriorates significantly that the sound operation of the Taiwan parent company might be adversely affected, the Competent Authority may order the Taiwan parent company to close the branch of its third-area subsidiary bank in Mainland Area.