SinoPac Financial Holdings of Taiwan has said that it is planning to sell a stake of 20 per cent to the Industrial & Commercial Bank of China (ICBC) of mainland China.

ICBC, which is the largest lender on mainland China, will invest about $660 million to acquire the stake in the Taiwanese lender. It will become the first bank from mainland China to hold a stake in a Taiwanese bank and indicates that the business links between the two sides have strengthened significantly over the years.

The deal between the two lenders is subject to an approval from financial authorities. The board of SinoPac Financial Holdings has already approved the deal to sell the stake to the Chinese bank. The deal was approved after the authorities in Taiwan and China entered into an agreement to relax limits on investment in each other's financial institutions from January of the previous year. The law allows Chinese banks to acquire upto 20 percent stake in a banking unit of a listed Taiwanese financial holding company.

The shares of SinoPac increased a 2.8 per cent and closed at Tw$14.70 on Wednesday after the bank announced its plans to sell stake to ICBC.