Domestic Banking Institutions
Financial institutions in Taiwan involved in indirect financing and money market activities include commercial banks, the Postal Remittances and Savings Bank, financial holding companies, local branches of foreign banks, credit cooperatives, and bills finance companies. The total number of those branches in Taiwan reached 5,040 in December 2022.
At the end of 2022, Taiwan was home to 39 commercial banks with 3,384 branch offices, which accounted for 80.41% of total deposit accepted and 90.80% of total loans extended in Taiwan. Commercial banks are relatively large in terms of their net worth, assets, and network of branches. 20 Taiwanese banks rank among the top 500 banks in the world in terms of tier one capital, according to the July 2022 issue of the Banker. Despite the fact that the Postal Remittances and Savings Bank only offers remittance and deposit services, the bank has a widespread network of more than 1,298 post offices nationwide. Hence, the bank accounted for 12.16% of total deposits outstanding and enjoyed the largest share of deposits among all financial institutions in Taiwan at the end of 2022. Deposits taken by the Postal Remittances and Savings Bank are prohibited from being used to make immediate loans. However, the bank is permitted to redeposit its deposits in certain banks and invest in various financial instruments.
Taiwan's credit cooperatives have been the major providers of banking services in regional communities for decades and played an important role in the domestic financial system. However, due to the reorganization of credit cooperatives and events of commercial banks acquiring credit cooperatives, the total number of credit cooperatives in Taiwan gradually declined to 23 in 2022 from 74 in 1994. Meanwhile, deposits taken by credit cooperatives declined to 1.49% of total deposits outstanding in Taiwan and their market share of loans extended dropped to 1.62% in 2022.
The introduction of bills finance companies attempted to provide efficient channels to raise short term fund and to facilitate the operations of Taiwan's money market. The bills finance companies help enterprises raise funds in the primary market by issuing short term bills and enhance the liquidity of short-term bills in the secondary market. At the end of 2022, Taiwan has 8 bills finance companies with NT$ 1,040 billion in total assets and 30 branch offices nationwide.
In order to expedite the integration process, expand the business scope, and boost the competitiveness of financial institutions, the Financial Holding Company Act was promulgated in June 2001. As of the end of 2022, 15 financial holding companies were set up in Taiwan. The government will push for financial consolidation based on market mechanism. The primary role of the government is to foster a fair and transparent environment for financial consolidation.