Foreign banks encouraged to expand in the West

Foreign banks are encouraged to put up offices and expand business in the West and the Northeast old industrial bases under the premise of meeting legal requirements, says Liu Mingkang, President of China's Banking Regulatory Commission.

China will gradually open its finance market as per the commitments made as its entry to WTO. At present, a total of 13 cities have opened RMB business to foreign banks, and a group of foreign banks has been ratified to offer RMB business for Chinese enterprises. With the continuous opening of China's finance market, business types of foreign banks undergo rapid growth. Foreign banks are now providing about 100 types of business and 12 kinds of basic business. The new business includes QFII trust, online bank, undertaking of national debt, cash management for enterprises, financial derivatives and management for individuals.

To further open the banking industry, the Banking Regulatory Commission has modified some policies concerning foreign banks. It modified "Regulations governing foreign banks investment in Chinese finance institute", according to which foreign capital is allowed to take up to 24.99 percent in a Chinese finance institution. Limit for individual organization's share will rise from 15 percent to 20 percent.

The commission also reduces levels of working capitals from 6 to 3, and lowers requests for working capitals. The requirment for legal institution's working capital will decrease from RMB 400 million to 300 million. In the future the requirement will be subject to changes under the principle of equity, i.e. host country should adjust its requirement for working capital if Chinese commercial banks is to set up branch in that country. The foreign debt management is changed as well.

Source: People's Daily Online