Four foreign-funded banks -- HSBC, Citibank, Standard Chartered Bank and Bank of East Asia -- officially began business on Monday as the first batch of locally incorporated overseas financial companies approved by China's banking regulator.

The four banking companies will launch a full range of forex services and RMB business, including RMB retail banking for ordinary Chinese citizens, once they have passed assessments by the country's banking regulatory authorities.

This means that the four banks can compete with their Chinese counterparts on an equal footing, analysts say.

"Our local outlets and resources are limited so we will focus on providing wealth management services," said Vincent Cheng, chairman of the HSBC Bank (China) Company Ltd.

The HSBC Bank (China) plans to open 30 new outlets this year on the Chinese mainland and recruit 2,000 more employees over the next two years.

The Bank of East Asia expects its post-tax profit from the Chinese mainland business to account for 35 percent of its total in 2010, up from 15.6 percent in 2006.

Eight other banks -- JPMorgan Chase, ABN Amro, Hang Seng Bank, Mizuho Corporate Bank, DBS Bank, Bank of Tokyo-Mitsubishi UFJ, Wing Hang Bank and Overseas-Chinese Banking Corp. -- are also preparing to establish a locally registered subsidiary bank with corporate status on the Chinese mainland.

Foreign banks were previously not allowed to offer foreign-currency services to individuals on the Chinese mainland, although they could provide both local and foreign-currency services to enterprises.

China fully opened its banking sector to foreign banks last December in line with the commitments it made when joining the World Trade Organization in 2001. But the country's rules stipulate that overseas banks must be locally incorporated before they can carry out RMB retail business.

Chinese bankers said overseas banks would not have much of an impact on domestic banks in the short term because of their lack of outlets.

"Most ordinary Chinese still rely on outlets for banking services. Overseas banks simply can't match their Chinese counterparts in this respect," said an employee at the China Construction Bank's Shanghai Branch.

But Chinese banks should take a lesson from the overseas banks regarding high-quality products, services, risk management and organizational structure to enhance their own competitiveness, said Zhang Yaolin, deputy president of the Shanghai-based Pudong Development Bank.

Source: Xinhua