The Standard Chartered Bank, which has 20 outlets in 14 Chinese cities at present, applied to the China Banking Regulatory Commission (CBRC) to set up a China-registered subsidiary and offer renminbi business for individuals on November 16, when the Regulations on Administration of Foreign-Funded Banks were just publicized.
"We are pleased about the announcement as we are actively interested in the opportunity to locally incorporate our business in China," Standard Chartered Bank China Chief Executive Officer Katherine Tsang said in a statement. The bank also plans to open two new sub-branches by the end of this year and double its outlets in China over the next 18 months. Some other foreign-funded banks, such as Citibank and the Hong Kong and Shanghai Banking Corp. (HSBC), also showed the same intent to apply to be locally incorporated banks.
Doors opened
After its accession to the WTO, China has faithfully honored its WTO commitments and taken a series of opening-up measures on its own initiative. According to statistics released by the CBRC, as of the end of September 2006, there were 14 wholly foreign-funded banks and joint venture banks registered in China, which opened 17 branches and sub-branches. In addition, 73 foreign banks from 22 different countries and regions established 191 branches and 61 sub-branches in 24 Chinese cities and 183 foreign banks from 41 countries and regions established 242 representative offices in 24 cities. The total renminbi and foreign currency assets of these foreign-funded banks amounted to $105.1 billion, accounting for 1.9 percent of the total banking assets in China. The total deposits amounted to $33.4 billion and the loans totaled $54.9 billion.
According to Chinese laws and regulations, Chinese branches of foreign banks, wholly foreign-funded banks and Chinese-foreign joint venture banks can, subject to approval, operate business in deposits, loans, clearing, trust services and insurance agencies. Additionally, such banks can apply to conduct renminbi business as long as they satisfy the requirements of operational periods, profitability and prudent operation. At the same time, foreign-funded banks are allowed to engage in derivatives trading, personal wealth management, offshore banking services on an agency basis (Qualified Domestic Institutional Investor) and electronic banking. The foreign-funded banks are now permitted to engage in over 100 categories of business activities. According to the CBRC statistics, by the end of September 2006, 25 Chinese cities were opened to foreign-funded banks' renminbi business, of which five cities were opened ahead of schedule, with 111 foreign-funded banks being permitted to undertake renminbi business. Since 2001, the volume of renminbi business by foreign-funded banks has grown 4.6 times at an annual average rate of 92 percent.
A growing regulator
In recent years, the Chinese Government has amended and promulgated a series of laws and regulations on banking institutions and their business activities. Thus, a legal framework for banking regulation and supervision has taken shape, such as the Law on Banking Regulation and Supervision, and the Regulations on Administration of Foreign-Funded Financial Institutions.
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