Banks from Taiwan have started to develop their businesses on the mainland.

The Bank of Taiwan and First Commercial Bank both signed comprehensive cooperation agreements with Bank of China (BOC) on Friday.

The banks will cooperate with BOC in several areas, including their main capital businesses, trade finance, financial services for small- and medium-sized enterprises (SMEs), and training for staff members.

"That means our bank can provide renminbi loans to businesses in Taiwan through BOC, and BOC can lend to firms from the mainland in new Taiwan dollars," said Susan Chang, chairperson of Bank of Taiwan.

Chang said the agreement will strengthen cooperation between banks on both sides of the Taiwan Straits, and allow them to explore local business opportunities, making it a win-win situation for all involved. Providing financial support for enterprises from Taiwan is just the first step for the banks.

Both Chang and Tzuoo-Yau Lin, president of First Commercial Bank, said they look forward to obtaining government permission to extend their business to mainland customers directly.

"The SME and personal financial businesses are advantageous to banks in Taiwan, and we will focus more on that," said Lin.

BOC established its first office in Taiwan on Oct 25, making it the first financial institution from the mainland to expand to the island.

Xiao Gang, chairman of the board of directors of BOC, said he welcomed competition from banks across the Straits, and expected that BOC will develop its business on the island a year after the establishment of its office there.

BOC has extended partnerships with 20 banks, and provided financial services to more than 1,000 companies from Taiwan. During the past three years, BOC has lent more than 120 billion yuan to enterprises from Taiwan.

Taiwan signed a Memorandum of Understanding (MOU) on financial services with the mainland's central government last November, allowing its banks to tap into the mainland's massive market and paving the way for lenders from both sides to invest in each other.

According to the MOU, the banking regulators on both sides will cooperate to swap and share information, establish institutions and deal with emergencies, to ensure the stable development of the banking sectors.

On June 29, the two sides signed a historic trade agreement, the Economic Cooperation Framework Agreement (ECFA), which removed market-entry barriers for banks across the Taiwan Strait.

Under the ECFA, banks from Taiwan are allowed to upgrade their representative offices in the mainland to branches a year after they are established, but do not necessarily have to situate the branches in the same location as their representative offices.

First Commercial Bank and Cathay United Bank, another lender from Taiwan, held opening ceremonies for their first offices in Shanghai on Thursday. The two banks, along with three others, gained central government approval to set up branches in the mainland on Dec 17.