Hong Kong-based Hang Seng Bank has been granted a QDII (Qualified Domestic Institutional Investors) license by the Chinese government, becoming the fifth overseas-funded bank to be granted such a license.

 

A QDII license allows domestic institutions and residents to invest money in overseas financial products via mainland and overseas commercial banks and other financial institutions.

 

The latest move brings the number of China's Qualified Domestic Institutional Investors to eleven, including five overseas-funded banks. The other overseas banks are Citibank, the Hong Kong & Shanghai Banking Corporation, the Standard Chartered Bank and the Bank of East Asia.

 

Some of the QDIIs are already offering services, and the Chinese government has so far allocated them an investment quota of US$9.3 billion.

 

Banks with QDII licenses funnel most of their investment into fixed-income financial products in overseas money markets.

 

China will fully open its financial market by the end of the year in line with its commitment to the World Trade Organization.

 

To gain an edge in the upcoming open competition on the mainland, the Hang Seng Bank has bought a stake in the Industrial Bank, a local bank in east China's Fujian province that is one of several regional banks authorized to operate outside its geographical area.

 

The Hong Kong-based bank, which has 14 branches in eight Chinese mainland cities, has decided to boost its mainland network to 30 branches over the next three years.

 

(Xinhua News Agency September 14, 2006)