China has given approval to four Taiwanese banks to set up branches on the mainland, a major step toward financial cooperation between the sides.
The late Thursday announcement by the China Banking Regulatory Commission came just days after a landmark trade agreement took effect to bring their two economies closer.
"This signals the advent of a new era for cross-strait exchange and cooperation in the banking sector," the Chinese agency said on its website.
The regulator said the Land Bank of Taiwan and First Commercial Bank were given approval to set up branches in Shanghai, while Taiwan Cooperative Bank and Chang Hwa Bank were permitted to open in nearby Suzhou and Kunshan respectively.
Many Taiwanese high-tech and other firms have set up large production bases in those cities. Taiwanese have invested more than $150 billion on the mainland, but political tensions between Taiwan and China had barred Taiwanese banks from setting up operations there.
Taiwan and China split amid civil war in 1949. Overall relations have improved greatly since Taiwanese President Ma Ying-jeou took office 28 months ago, spurred by closer commercial and cultural ties.
Under the trade agreement signed by the two sides in June, the Taiwanese banks will be allowed to extend loans in Chinese yuan to Taiwanese companies if their first year's operations yield profits. After two consecutive years of staying profitable, their services can be extended to mainland firms as well.
Chen Yuh-chang, head of Taiwan's Financial Supervisory Consumers, said three other Taiwanese banks are still awaiting China's approval to set up branches.
Chen said the Taiwanese regulator is screening the applications of the Bank of China and Bank of Communications to establish representative offices in Taiwan.
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