Overseas Banks Expand Business in China

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Last updated at: (Beijing Time) Friday, March 29, 2002

Overseas Banks Expand Business in China

Overseas banks operating in China's mainland are lining up to announce major expansions in their business scope. The expansions reflect an optimistic attitude toward the banking businesses in China after it became a full member of the World Trade Organization (WTO).

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More overseas banks applying for expansion

Overseas banks operating in China's mainland are lining up to announce major expansions in their business scope.

Eddie Wang, president of Hong Kong and Shanghai Banking Corporation's business in China, said that to further expand in China's mainland, the corporation has applied to the People's Bank of China, China's central bank, for permission to open its second sub-branch in Shanghai.

Wang said the Shenzhen Branch of the banking corporation recently opened financial management services and the Shanghai Branch will provide such services in June this year.

The Shanghai Branch of Citibank, which is located in the Pudong New Area, has been approved by the central bank to provide foreign currency services to both Chinese citizens and foreigners in the mainland, thus becoming the first solely foreign-funded bank to open such services.

Bank sources said that a branch of the Citibank in the Puxi Area of Shanghai went into operation last week.

China to gradually lift restrictions on overseas banks

The expansions reflect an optimistic attitude toward the banking businesses in China after it became a full member of the World Trade Organization (WTO).

According to its commitments for WTO entry, China will gradually lift its restrictions on overseas banks doing businesses in China.

In February this year, China issued two circulars on the management of overseas financial institutions in China and on detailed implementation methods which worked together to provide policy guidance for foreign banking companies doing RMB business in China.

Many overseas banks operating in China responded actively to the statutes, applying for permission to open both foreign currency and RMB businesses. They include Hong Kong and Shanghai Banking Corporation and Citibank, among others.

Some overseas banks such as Heng Seng Bank of Hong Kong and J.P.Morgan Chase & Co. have or are preparing to submit applications for running their own currency businesses.

Officials with the Shanghai Branch of the People's Bank of China said that judging from the current situation, European and American banks and those from Hong Kong are more interested in opening foreign currency businesses to Chinese individuals, and Japanese banks mainly eye overseas-funded enterprises.

By the end of September, 2001, overseas banks had opened 190 business outlets in China, involving a total capital of 44 billion U.S. dollars.

Related News: China to Open Banking Sector as Promised

China will keep its promise to gradually open up its banking sector in accordance with the timetable set in the WTO agreement, said Chinese central bank governor.

Dai Xianglong, governor of the People's Bank of China, confirmed this on Friday at a New Year party for foreign financialinstitutions in China.

Dai said that the opening up of China's banking industry is an important part of China's policy of opening and reform. China's entry into the WTO marked a new stage in China's banking industry.

He said that China will continue its reforms in the banking sector, including the establishment of a banking supervision standard which conforms to international practices; accelerating reforms of state-owned commercial banks to improve their competitiveness; continuing to practice a prudent monetary policy;maintaining the international balance of payment and protecting the stability of the local currency.

"The great potential for development in the Chinese economy promises high capital returns and untapped business opportunities in financial services," he said, adding that competition and cooperation between Chinese and foreign financial institutions will bring greater development of the banking sector.

By the end of 2001, foreign financial institutions had set up 214 representative offices and 190 business institutions in China,with combined assets of 45.2 billion U.S. dollars. A total of 31 foreign banks have been ratified to deal in Renminbi.

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