China's banking regulator said it would continue to push for the local incorporation of foreign banks on Thursday.

The China Banking Regulatory Commission (CBRC) also urged locally incorporated foreign banks to build a so-called Chinese Wall separating themselves from parent banks and remaining Chinese branches. They should also set up independent risk control, accounting and IT systems to prevent overseas risk overflow, a statement on its website said.

The CBRC will "pay close attention to the branches and subsidiary institutions of the subprime-affected foreign banks, and take more prudent supervision measures," said the statement.

Foreign banks have been increasing steadily in assets, profits, deposits and loans. Outstanding non-performing loans were reduced by 45 million U.S. dollars year-on-year, said the statement.

In total, 21 of these banks -- including the Standard Chartered Bank, the Bank of East Asia and the Hong Kong and Shanghai Banking Corp. -- have been approved to transform their Chinese mainland branches into locally-incorporated banks registered on the mainland by last year.

Among them, six have been approved to provide renminbi services and five will be able to issue bank cards.

Since foreign institutional investors were first allowed to invest in Chinese banks starting in 1996, 35 overseas banks have acquired stakes in 23 Chinese banks with a total investment of 21 billion U.S. dollars by October.

Among them, the main business of the locally-incorporated banks had already accounted for 70 percent of the business of all foreign banks in 2007, the statement said.

(Xinhua News Agency March 7, 2008)