Taiwan's top financial regulator has formally announced guidelines on investments between local and Chinese banks and financial institutions after the government gave its approval.

The Financial Supervisory Commission said in a statement earlier this week that among the guidelines, single mainland banks will not be allowed to take over a 5 percent stake in any Taiwanese bank, while Taiwan banks will not be allowed to invest more than 15 percent of their book value in Chinese banks.

Reuters had reported earlier in March that the government would approve the guidelines, which followed a historic financial services pact with China that took effect in January.

Taiwan had been reluctant to open its financial services sector to Chinese investment on concerns over Chinese dominance. The measures bode well for acquisition opportunities in the cross-strait banking sector.