Obstacles set by Taiwan authorities stand in the way of the island's banks which want to operate on the mainland, a senior official with the banking regulator told a news briefing yesterday.

There are similar hurdles obstructing mainland banks from entering Taiwan.

"The Taiwan authorities still have concerns over allowing banks to enter the mainland They have created many legal limitations," said Wang Zhaoxing, assistant chairman of the China Banking Regulatory Commission.

Lack of co-operation between financial regulators across the Straits also hinders Taiwan banks from setting up subsidiaries on the mainland, he said.

The early entry of Taiwan-funded banks would require the island's authorities to remove legal obstacles. Moreover, a joint memorandum of understanding a market entry prerequisite for banks from both sides must be signed by banking authorities to tighten supervision and share information, he noted.

"Without close co-operation and information-sharing (between the two sides), we cannot effectively supervise and regulate business activities of Taiwan banks if they are allowed in," Wang said.

Seven Taiwan banks have set up representative offices on the mainland.

The lack of direct links between the banking sectors across the Straits has increased costs for Taiwan enterprises doing business on the mainland.

According to Wang, some mainland banks have applied to Taiwan authorities for opening representative offices there, but none has been approved.

The new regulation allowing overseas-funded banks to offer renminbi services on the mainland is also applicable to banks from Taiwan, Hong Kong and Macao.

Editor: Donald