Taiwan and the mainland have taken a big step towards dismantling one of the biggest remaining barriers to cross-strait economic ties by reaching an initial agreement to allow Taiwanese banks to buy stakes in mainland banks through subsidiaries in Hong Kong.

Taiwanese companies are among the biggest foreign investors on the Chinese mainland, with more than $150 billion in assets but Taiwan law bans banks from investing in the mainland.

Banking regulators in Taipei and Beijing have now agreed that Fubon Bank, one of Taiwan’s largest lenders, can take a 20% stake in Xiamen Commercial Bank through Fubon’s Hong Kong subsidiary.

The Hong Kong Monetary Authority (HKMA), the territory’s central bank, will act as an intermediary for supervisory information. People close to the agreement said the Fubon investment would act as a ‘case study’ for future possible tie-ups.

It is not clear when the mainland will signal its final agreement although there is a suggestion it could come in late March.

Fubon bought Hong Kong-based International Bank of Asia in 2003, but has failed to get approval from Beijing for its subsidiary to acquire a stake in a mainland bank.

The illustration has  nothing to do with the story, although it is a role playing character called ‘Fubon’. Better looking than a bank any day.
Source: Financial Times