The Bank of China opened its first bank branch in Taipei yesterday to much media fanfare as decades of tension cool. China's third largest bank has a global banking network, but it is the first time that any mainland Chinese bank has received approval from Taiwan's financial regulators for commercial banking licenses.

With the aim of forging closer ties with Taiwan, Bank of China yesterday became the first Chinese lender to set up a branch in Taiwan, with the opening ceremony attended by Taiwanese officials and top banking executives.

Li Lihui, governor of the bank, called the opening a "milestone in the deepening of economic and financial cooperation between Taiwan and the mainland" and said the move will allow it to lend another 220 billion yuan ($35 billion) to local companies in the next three years to further facilitate cross-straits trade and investment.

The branch however will mainly focus on corporate banking, dealing with deposits, loans, commercial bills, letters of credit, issuance of financial bonds and corporate bonds, China Dailyreported.

Bank of Communications, the fifth-largest in China, will soon follow suit, said an official from the island's financial supervisory commission.

The two banks have operated representative offices on the island for more than a year before being allowed to open branches.

Following a 2009 deal, when both countries signed an agreement to enhance banking cooperation, eight Taiwanese banks have opened branches in China offering financial services for Taiwanese nationals based in the Mainland.

Earlier this month, China promised to open its labour market to Taiwan, declaring that Taiwanese residents would be granted equal status as their mainland counterparts when applying for jobs in the country.

According to Chinese officials, Chinese employment agencies would also offer free consulting services for Taiwan job-seekers, while Taiwanese students educated in the mainland would be eligible for employment in public offices.

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Cross-strait tensions over national sovereignty have eased over the years, particularly since Ma Ying-Jeou of the Beijing-friendly Kuomintang came into power in 2008.

Last year, cross-strait trade was valued at $160 billion.