HSBC is to target more rural banks on the Chinese mainland to ride on China's rural development.

The bank plans to open its second rural bank in Chongqing in the third quarter as regulatory approval is gained, said Peter Wong, executive director of the Hong Kong and Shanghai Banking Corp.

Another two applications are being processed, said Wong, declining to disclose the locations.

HSBC became the first overseas bank to tap into the market when it opened its first rural bank in central China's Hubei Province in mid-December.

"We see rural banking a profitable business, not only as a means to support China's economy," said Wong. "We eyes it a long-term business and the risk is limited."

He expect HSBC's first rural bank -- the Hubei Suizhou Cengdu HSBC Rural Bank Co Ltd -- to break even in three and a half years.

The subsidiary under the Hong Kong and Shanghai Banking Corp, the Asian division of HSBC Holdings, has a registered capital of 10 million yuan (1.43 million U.S. dollars).

HSBC has rural banking business in India and the South American markets.

The bank will gain more experience on the mainland and hopes to quicken the expansion next year.

(Shanghai Daily June 2, 2008)