SinoPac shares up on selling 20% stake to ICBC

Share prices on Taiwan's SinoPac Financial Holdings rose Wednesday after it announced plans to sell a 20 percent stake to the Industrial & Commercial Bank of China (ICBC), the mainland's biggest lender.

The deal, estimated at around Tw$19.7 billion ($660 million), would become the first ever investment in a Taiwanese bank by a Chinese lender and is the latest sign of warming ties between Beijing and Taipei.

SinoPac's share prices rose by 2.8 percent after the bank's board approved the deal, which is pending approval by financial authorities, on Tuesday. SinoPac Financial closed at Tw$14.70 Wednesday.

This sale comes after Taiwan and China agreed to further ease investment caps in each other's financial institutions from January last year.

Under new measures individual Chinese banks will be permitted to acquire up to 10 percent of a bank listed in Taiwan, up from five percent.

Total Chinese shareholdings may go up to 15 percent after a five percent ownership cap for investors under the Qualified Domestic Institutional Investors scheme is included.

Chinese banks may also acquire up to a 20 percent stake in a banking unit of a listed Taiwanese financial holding company.

The easing comes more than a year after Taiwan removed a prohibition put in place in 1949.

Taipei and Beijing in 2009 signed a package of agreements on better cooperation in banking, insurance, and securities.

Currently six Taiwanese banks have branches in China while four others have opened up liaison offices there. Two Chinese banks have set up branches in Taipei while two others have opened up representative offices.

China still considers Taiwan part of its territory, even though the island has governed itself since 1949 at the end of a civil war.

Ties have improved since Ma Ying-jeou became Taiwan's president in 2008 on a China-friendly platform. He was re-elected in January 2012 for a second and final four-year term.