Taiwan Objects to China Construction Bank Use of ‘Island’

Taiwan’s market regulator told financial institutions to respect Taiwan’s dignity in marketing materials for cross-strait financial products, after China Construction Bank Corp. (939) referred to Taiwan as an “island.”

Cross-strait market participants must uphold the principles of equal standing, in accordance with the act governing relations between Taiwan and mainland China, the Financial Supervisory Commission said in a statement today. Gretai Securities Market Secretary-General Huang Bing-jing said the bond exchange sent a letter to CCB’s Taipei branch saying the reference “hurt” relations.

CCB is one of the first four Chinese lenders to sell yuan debt in Taiwan after banks were permitted to start holding deposits in the mainland currency this year. Taiwan has been ruled separately from China since the Nationalist party lost control of the mainland to Communist forces in 1949.

Construction Bank’s Formosa bond advertisement “belittles Taiwan,” the Taipei-based Liberty Times said in in a Dec. 11 front-page story that carried the headline: “Siphoning money and brainwashing.”

The Bank of Communications Co., Bank of China Ltd. and the Agricultural Bank of China also listed their bonds on the Gretai exchange this week, with the four lenders raising the combined total of 6.7 billion yuan ($1.1 billion).

Taiwan started competing for yuan business with Hong Kong, Singapore and London in February. Chinatrust Commercial Bank was the first issuer of yuan-denominated debt on the island.

As of the end of October, Taiwan banks’ yuan deposits totaled 123.2 billion yuan, compared with 98.7 billion yuan a month earlier, according to the local central bank.

To contact the reporters on this story: Yu-Huay Sun in Taipei at ysun7@bloomberg.net; Chinmei Sung in Taipei at csung4@bloomberg.net

To contact the editor responsible for this story: Debra Mao at dmao5@bloomberg.net

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