TAIPEI: Financial regulators plan to let local banks invest in their mainland counterparts sooner than expected and ease restrictions on insurance firms' investments on the mainland, the Economic Daily reported yesterday.

The Financial Supervisory Commission (FSC) decided in an emergency meeting to allow such investments. A landmark mainland-Taiwan deal is set to take effect on Saturday, the paper said in a front-page story, citing unnamed FSC officials.

Previously, the FSC would allow Taiwan banks to set up branches on the mainland only at the early stages of the financial deal, the paper said.

The FSC also plans to scrap a rule that limits Taiwan insurers investments in mainland insurance firms to no more than 10 percent of their capital, the paper said.

The new rules are subject to approval by the Executive Yuan, according to the report.

In November, Taiwan sealed a financial memorandum of understanding (MOU) with the mainland, allowing its banks to tap the mainland's massive market and opening possibilities for financial firms to invest in each other.

But the issue of most concern to investors - guidelines for financial firms on both sides investing in each other - will be discussed in a free trade pact, or the so-called economic cooperation framework agreement (ECFA), the Taiwan government had said, adding it aimed to sign the ECFA early in 2010.

China Daily/Reuters

(HK Edition 01/13/2010 page2)