Setting up a foreign-owned bank in China requires strict adherence to the China Banking Regulatory Commission's (CBRC) Measures for the Implementation of Administrative Licensing Items Concerning Foreign-Funded Financial Institutions.

Here we look at applying for a business license, and establishing a branch.

Applying for a business license

A list of "prudent" requirements (Article 9) of the measures must be met:

(1) Having a reasonable corporate governance structure;

(2) Continuous good business performances;

(3) Having formulated financial statements by following the prudent accounting principle, and the accounting firm holding clean opinions on the financial statements of the three years prior to filing the application;

(4) No record of serious violation of law or regulation, and without bad credit record;

(5) Enjoy a good reputation and social image;

(6) Meeting other relevant requirements for financial investors as provided for in the laws and regulations; and

(7) Other prudent requirements of the CBRC.

After meeting the conditions and requirements stated above, an applicant can now prepare a Preparatory Application for Establishment and must submit the following documents, in duplicate, to both the national and relevant regional CBRC offices where the bank is to be established. The regional office will submit a recommendation to the CBRC within 20 days of receiving the application. The CBRC will then have six months to approve or deny the application. A complete preparatory application will contain the following:

(1) A preparatory establishment application document (letter) which is jointly signed by the chairmen of the board of directors, or presidents (chief executive officers or general managers) of all investors and is addressed to chairman of the CBRC. The application document (letter) for the preparatory establishment of a solely funded bank shall at least contain the name, amount of registered capital and varieties of business of the solely funded bank to be established. The application document (letter) for the preparatory establishment of an equity joint bank shall at least contain the name of the equity joint bank to be established, the name of all investors, the amount of registered capital, the percentage of capital contributions of each investor, and the type of business;

(2) A feasibility study report, which shall at least contain the basic information of the applicant, analysis of the market prospect of the solely funded or equity joint bank to be established, plan on the development of future business, organizational and management structure, and forecast of the asset-liability scale and profits of the three years after the start of business operations;

(3) The articles of association of the solely funded or equity joint bank to be established;

(4) The contract for the equity joint bank to be established;

(5) A photocopy of the business license or any other financial business licensing document of the investor of the solely funded bank or of each investor of the equity joint bank issued by the competent authority of the country or region where the said investor is located;

(6) Annual statements for the recent three years of the investor of the solely funded bank or of each investor of the equity joint bank;

(7) The document (letter) of opinions of the competent authority of the country or region where the investor of the solely funded bank or each investor of the equity joint bank is located;