Foreign banks including HSBC and Citigroup Inc have applied for
final approval to incorporate in Shanghai, China.
HSBC and Citigroup have completed internal preparations and
received a positive report from the China Banking Regulatory
Commission on March 2. HSBC and Citigroup were two of the first
overseas banks to file on Monday for final regulatory approval.
"We invested significant resources in the preparation work as we
regard local incorporation as a very positive development for
China's banking sector," said Richard Yorke, chief executive
officer of HSBC China. "We look forward to incorporating our China
business in Shanghai upon receiving the final approval from the
CBRC."
Sources said Bank of East Asia and Standard Chartered Bank have
also received positive reports from the regulator's inspection.
In December, the first batch of nine overseas banks including
Hang Seng Bank, Mizuho Corporate Bank, Bank of Tokyo-Mitsubishi
UFJ, DBS Bank and ABN Amro Bank N.V. applied to incorporate in
Shanghai.
Lenders such as ABN Amro expect an inspection in two weeks.
Hang Seng Bank's mainland subsidiary is expected to set up in
the first half of this year, said Johnson Fu, the bank's head of
China business.
Overseas banks can tap a full array of retail yuan services
including ATM cards after incorporating locally with registered
capital of one billion yuan (US$129 million).
Banks including HSBC and Citigroup have taken a two-tiered
approach to expansion in China. First, they purchased strategic
stakes in domestic lenders, and now are looking at organic
growth.
Citigroup works with Shanghai Pudong Development Bank on credit
cards.
Overseas banks that don't incorporate locally will need three
times more capital to offer yuan services to customers. Also, those
banks can only take fixed deposits of one million yuan or more.
This limits their retail yuan business.
(Shanghai Daily March 7, 2007)