Taiwan allows two Chinese banks to set up offices

Sep 23, 2010, 13:54 GMT

Taipei - Taiwan on Thursday approved applications by two state-controlled Chinese banks to set up representative offices on the island, in a further sign of warming ties.

The Bank of China, the mainland's third-largest lender by assets, and Bank of Communications Co, its fifth-largest, are to become the first Chinese lenders to open offices in Taiwan, the Financial Supervisory Commission said.

The approval came after China's regulator announced last Thursday the go-ahead for four Taiwan's banks to establish branches in China.

The four Taiwan banks - who have had representative offices in China for more than a year - could then offer Chinese currency services to Taiwan businessmen based in China.

The Chinese banks' representative offices in Taiwan do not have authorization to offer financial services until they are promoted to the status of branches.

Until then, they 'are only allowed to establish official contacts with their local counterparts and potential clients as well as to gather information about financial and monetary conditions in Taiwan,' the commission said in a statement.

The conversion to branches can happen after one year, according to a semi-free trade agreement signed by Taipei and Beijing in June.

The inking of the pact marked a watershed in Taiwan's economic link with China, made possible after Beijing-friendly President Ma Ying-jeou took office in 2008 and adopted a policy to engage China.

Diplomatic relations between the two sides have been tense since they split at the end of a civil war in 1949.