The past three years seem to have been more of a process of integration than a confrontation for Chinese banks and their foreign counterparts.

A number of giant global banks have bought into Chinese banks - with the biggest single foreign purchase reaching 19.9 per cent.

Statistics from the China Banking Regulatory Commission (CBRC) indicate that nine Chinese banks introduced foreign strategic investors. And another nine are in negotiation with potential foreign buyers.

Even in the State-owned Big Four, the entry of foreign strategic investors is an unavoidable trend as they turn to joint stock banks and head for public listings.

Chinese authorities even require all newly established commercial banks to have at least one foreign investor.

The advent of more foreign and local co-operative banks has enabled the foreign banks to quickly expand their own distribution network in China.

In return, they lend their technology and expertise to help their Chinese partners run more efficiently and build up risk management and credit culture.

"We are working together with our Chinese partners to help build a modern banking system and a prosperous future," said John Bond, Chairman of HSBC Group, one of the world's largest financial organizations.

In the last three years, the group invested nearly US$3 billion in Chinese mainland financial organizations, including banks, trust firms and insurance companies.

"This shows our confidence in China's financial reforms and our confidence in China's future," Bond said during a visit to Beijing last month.

Foreign banks, when hard to form a large local network as their local rivals had, would seek the right partners as a shortcut for their business expansion.

HSBC's union with the Bank of Communications in August cost HSBC US$1.75 billion to acquire a 19.9 per cent stake in the Shanghai-based bank, the biggest single foreign investment in the Chinese banking industry so far.

But with the partnership, HSBC has already led management in a new credit centre launched by the two. And it will directly participate in top management of the Chinese bank, which is preparing for a public listing both in Hong Kong and the mainland.

Meanwhile, the advance of its own network has never ceased.

HSBC already has banking branches in 10 mainland cities and is doing renminbi business with local corporations in seven cities.

The number will increase steadily as China opens up another five major cities for foreign banks to provide renminbi services beginning this month. It is expected to lift all geographic and customer restrictions in two years, which will offer foreign banks real national treatment.

Recently, HSBC applied for a licence to operate renminbi business in Beijing and Xiamen. Both cities are newly added to the opened list.

Bond predicts the bank will open branches in 20 mainland cities in the coming years.

Other foreign banks, including Citibank, are adopting a similar strategy to develop in the Chinese market, though the pace of entry may differ.

Source: China Daily