Regulations Governing the Banking Activity and the Establishment and the Investment by Financial Institution Between the Taiwan Area and the Mainland Area Article 35

A Taiwan bank that meets the following requirements may apply to the Competent Authority for approval to establish a subsidiary bank 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 Tier 1 capital to risk-weighted assets after deducting the amount allocated for the proposed investment in the subsidiary bank in Mainland Area is 8% or higher;3. The bank’s non-performing loan ratio is 1.5% or lower during the latest fiscal half year;4. The bank’s loan loss coverage ratio is 100% or higher during the latest fiscal half year;5. The bank’s employees have international financial knowledge and experience; and6. 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 subsidiary bank in Mainland Area.