Foreign banks hurry to set up local branches

(Xinhua)
Updated: 2006-12-29 10:02

The Hong Kong and Shanghai Banking Corp (HSBC) Thursday set up another local branch in northern China's Tianjin City, making it one of the foreign-funded banks with most local outlets in the country.

The Bank of East Asia, another overseas-funded lender with most local subsidiaries on the mainland, opened 13 branches in China this year, raising the total number to 31.

With ten newly founded branches this year, the HSBC also has more than 30 local branches in the mainland so far, followed by the Standard Chartered Bank that opened five local branches this year.

Other foreign-funded banks, including the Hang Seng Bank and Citibank, have also set up more branches in China this year.

The Bank of East Asia now spends the most investment among all foreign-funded banks on localization.

The Standard Chartered Bank will set up two more branches at the beginning of next month and double the number of its branches in the coming 18 months, according to source with the bank.

Li Guobao, chairman of the Bank of East Asia, predicted last month the number of its Chinese branches will reach 60 to 80 in three years, and most of them will be in big cities.

Insiders said one of the biggest disadvantages for foreign banks to expand its business in China, compared with Chinese banks, is the small number of sub-branches.

According to a report from Price Waterhouse Coopers, twelve foreign banks, among the 35 respondents, plan to offer Renminbi services to Chinese customers as soon as possible.

The China Banking Regulatory Commission (CBRC), the country's banking regulator, announced recently it has approved nine foreign-funded banks to transform their Chinese branches into locally incorporated banks registered on the mainland.

Under the regulations, China will treat the foreign-funded banks the same as domestic ones, allowing them to conduct Renminbi business for Chinese citizens in line with its commitments to the World Trade Organization.

Statistics from the CBRC show the assets of foreign-funded banks in China totaled 105.1 billion US dollars in September, accounting for 1.9 percent of all banking institutions in the country.