Shenzhen has become a bridgehead for Hong Kong-funded banks to enter China's mainland market, according to Yu Xuejun, chief of the Shenzhen branch of the China Banking Regulatory Commission.

"Because of its proximity to Hong Kong, Shenzhen Special Economic Zone (SEZ) has attracted many Hong Kong-funded banks to expand their businesses in the city since the SEZ was established 25 years ago," Yu said.

By the end of June this year, Hong Kong-funded banks had set up 20 branches in the SEZ with capital totalling US$5.281 billion, accounting for 51.77 percent of all foreign bank capital in the SEZ.

In the first half this year, they realized profits of US$31.99 million, 66.2 percent of total profits realized by all foreign banks in Shenzhen.

Hong Kong funded banks have a particular advantage in the personal loan business in the SEZ.

As of the end of June this year, they had issued personal loans totaling US$381 million, which accounted for 96.5 percent of personal loans issued by all foreign banks.

Hong Kong-funded banks have also been very active in providing loans for Chinese-funded enterprises in Shenzhen.

By the end of June this year, they had provided the city's Chinese enterprises with loans totaling US$551 million, or 82.4 percent of all loans provided by all foreign banks.

"With economic integration of Hong Kong and Shenzhen, the financial integration between Hong Kong and Chinese mainland will be getting increasingly closer in the next few years," Yu said.

According to China's promise upon its entry into the WTO, the country will open all financial businesses to foreign banks beginning from Dec. 1, 2006.

"It can be expected that Hong Kong-funded banks will take the opportunity and use Shenzhen as a bridgehead to expand their businesses on the mainland," he said.

Source: Shenzhen Daily