Taiwan to open banks to China lenders -report

TAIPEI, June 24 (Reuters) - Chinese banks will be allowed to buy up to 20 percent of their Taiwan counterparts under a plan being developed by Taiwan's banking regulator, local media reported on Tuesday.

The plan being developed by the Financial Supervisory Commission (FSC) is part of a broader series of moves aimed at boosting Taiwan's economy through closer ties with political rival China under the administration of new President Ma Ying-jeou.

The 20 percent ceiling in the plan parallels a similar rule imposed by China, which limits foreign investment in its banks to 20 percent or less, the Chinese-language Commercial Times reported, citing an FSC official.

Earlier this month, Taiwan's Fubon Financial (2881.TW) said its Hong Kong subsidiary would pay 230 million yuan ($33 million) for nearly 20 percent of southeast China's Xiamen Commercial Bank, becoming the first Taiwan financial holding company to invest in a Chinese lender.

The FSC and other Taiwan government agencies are in the midst of developing a series of new rules and regulations to promote closer economic ties between Taiwan and and China.

Such ties were tightly restricted under the previous administration of former President Chen Shui-bian, who had a much more contentious relationship with Beijing.

Last week, the FSC's incoming Chairman Gordon Chen told Reuters he aims to allow Taiwan brokerages to invest in their Chinese counterparts by the end of 2008.

To facilitate the flow of investments, the FSC has also said it plans to allow Taiwan's brokerages to invest up to 30 percent of their net assets in China, up from 10 percent previously.

Taiwan is also aiming to allow qualified institutional investors from China to buy Taiwan stocks and mutual funds by the end of next year, Chen said.

Other plans include allowing exchange-traded funds (ETFs) launched by Taiwan's and China's fund management firms to trade in each other's markets.