UPDATE 1-Taiwan's Cathay Fin could invest in Chinese banks

* Cathay Financial plans branch in Shanghai

* Targets Taiwanese, Chinese, foreign companies as customers (Adds comments, details)

TAIPEI, Nov 26 (Reuters) - Cathay Financial (2882.TW: Quote, Profile, Research), Taiwan's top listed financial holding firm, could invest in or establish tie-ups with Chinese banks when regulations allow, an executive said on Thursday.

"We are considering all possibilities when we enter the Chinese market," company President Chen Tsu-pei told Reuters on the sidelines of a company event.

"Investing in a Chinese bank or forming a tie-up is among those we're thinking about," he said, without offering details.

It would also be possible for Chinese banks to buy a stake in Cathay Financial, he said.

Taiwan signed a financial services deal with China earlier this month, clearing the way for financial companies from either side of the Taiwan strait to buy stakes in their counterparts by as soon as early 2010.

The pact also allowed the island's financial firms to tap the fast-growing Chinese market. (For a TAKE A LOOK on the deal, please double-click [ID:nTP165902])

Cathay Financial initially plans to set up a branch in Shanghai and then a subsidiary in mainland China, Chen told an investor conference.

Taiwan companies operating in China would be the targeted customers for Cathay Financial in the initial stage, followed by Chinese and foreign companies, he said.

On Thursday, Cathay Financial stocks ended down 1.02 percent, while the broader market .TWII slipped 0.22 percent. ((Reporting by Faith Hung; Editing by Chris Lewis) ((faith.hung@thomsonreuters.com; +886 2 2508-0815; Reuters Messaging: faith.hung.reuters.com@reuters.net)) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com))