Latest News:  
Beijing   Foggy/Cloudy    20 / 11   City Forecast

Home>>China Business

Foreign banks remain optimistic over expansion in China

(China Daily)

09:25, October 20, 2011

BEIJING - Foreign banks in China are still fighting hard to define their role in the Chinese market and expand their operations 10 years after China joined the World Trade Organization, said analysts.

"Foreign banks are losing market share while domestic banks are gaining competitiveness. Moreover, foreign banks are still not yet free from the pressures of the global financial crisis," said Johnson Chng, head of financial services for Bain & Co in Greater China.

Lim Cheng Teck, chief executive officer and executive vice-chairman for Standard Chartered Bank (China) Ltd, said China made a good start in opening up to foreign players but the threshold needed to be further lowered.

"We brought increased competition to the Chinese market and so provided more creativity and a better allocation of resources and improved the market efficiency," said Lim.

Melvin Teo, chief executive officer of DBS Bank (China) Ltd, a subsidiary of Singapore-based DBS Bank Ltd, said Chinese banking regulators are very concerned about the pace of expansion of foreign banks in China and want to make sure outlets are not opened too quickly or without appropriate regard for their likely success. "Prudence could also benefit our sustainable development," he added.

In 2006, China announced it was opening up the domestic market and yuan-denominated business to foreign banks. However, the fact that foreign banks need to get approval from the China Banking Regulatory Commission (CBRC) if they want to open new outlets has limited their expansion across the country.

Currently, a foreign bank is usually allowed to open only one branch in China each year in first-tier cities.

Foreign banks' total assets grew steadily between 2003 and 2007, stalled in 2008 and 2009 at the time of the stimulus plan, and grew again in 2010.

The 127 foreign players' overall market share accounted for just 1.83 percent in 2010, according to a report released by PricewaterhouseCoopers (PwC) International Ltd in June.

Facing strong competition from major Chinese banks and the high cost of developing extensive outlets, some foreign players have decided to quit the consumer banking sector and pay more attention to fields more attuned with their advantages, such as the investment banking business.

In December 2010, Royal Bank of Scotland Group PLC (RBS) announced it would transfer its retail and commercial banking businesses in China, including close to 25,000 clients in Shanghai, Beijing and Shenzhen, as well as its employees, to DBS China free of charge.

In addition, banks need to meet the required loan-deposit ratio of 75 percent and new capital regulatory parameters set by the CBRC, especially the 2.5 percent provision ratio.

While feeling the increasing weight of new regulations, coupled with tightening liquidity as the government seeks to curb inflation, foreign banks operating in China are still "surprisingly confident" about their prospects in the Chinese market, according to PwC.

"The market share figure fails to reflect how the foreign banks continue to redefine the market segments that offer them the opportunity to excel and plot a path of stable, long-term expansion," said PwC.

"We are very confident in our development in China and will continue our expansion plan," said Pierre Bonzom, CEO of commercial and personal banking at Societe Generale (China) Ltd, adding that the prospects for a universal banking model are still bright in China.

Email|Print|Comments(Editor:陈乐乐)

Leave your comment0 comments

  1. Name

  

Selections for you


  1. College arts on exhibition in east China

  2. Specimen of legendary elephant in Taipei

  3. Three Gorges Dam water level reaches 174.18m

  4. Violence greets new Greek efforts to cut public spending

Most Popular

Opinions

  1. Chinese culture of peace promotes development
  2. Red flags raised as Japan mulls repeal of arms ban
  3. Job death shows Americans' love of big business
  4. Wall Street leads the West to a world of chaos
  5. Are China's forex reserves too big?
  6. Signs of higher mortgage rates
  7. Taobao Mall suffers from growing pains
  8. Is investing in forex cost effective?
  9. China needs cultural power
  10. Small vendors' wrath

What's happening in China

Themed restaurants attract many curious customers

  1. Farmer sold as slave to factory 'over complaint'
  2. Overuse of antibiotics concerns officials
  3. Survey shows people lack trust in each other
  4. Future bright for problem solvers in Party
  5. Ministry aims to reign in high prices on railways

PD Online Data

  1. Dragon Boat Festival and Qu Yuan
  2. Hanging Pictures of Zhong Kui
  3. Fragrant bag
  4. Dragon boat racing
  5. Zongzi in Dragon Boat Festival