China's banking regulator has approved the first group of nine foreign banks to start their preparatory work for setting up local corporations in China.

The nine lenders are Standard Chartered Bank, Bank of East Asia, HSBC, Hang Seng Bank, Mizuho Corporate Bank, the Bank of Tokyo-Mitsubishi UFJ Ltd, DBS Bank, Citigroup and ABN AMRO, the China Banking Regulatory Commission (CBRC) said yesterday.

All nine must register their local entities in Shanghai, CBRC said on its website.

According to the new regulations on the administration of foreign-funded banks and the amendment rules, the approval of the preparatory work is the first step for the banks' local incorporation.

When the banks complete this process, the CBRC will approve the official establishment of their local corporations.

It is believed it will still take some time for the official setting up of the banks' local subsidiaries and obtaining licences.

The new foreign bank rules, which took effect from December 11, encourage foreign banks to incorporate locally when doing renminbi retail business to minimize the risks for Chinese customers.

Foreign bank branches are only allowed to offer limited yuan services.

Starting from December 12, a few foreign banks including HSBC, Citigroup and Standard Chartered, have been allowed to take renminbi deposits from Chinese individuals for amounts of no less than 1 million yuan (US$127,000).

"Successful local incorporation will enable Standard Chartered to provide its clients with a larger product suite as well as a wider array of financial services," said Katherine Tsang, chief executive officer of Standard Chartered Bank, China.

"We are delighted with this progress as we are keen to become a local entity formally in China," she said.

The new entity will be registered as Standard Chartered Bank (China) Ltd, to replace the current branch.

According to Tsang, the approval marks the first step in achieving the bank's objectives in China.

The combined assets of the nine banks account for 55 percent of the total foreign banks in China, and they contribute 58 percent of the total profits for foreign banks in China.

(China Daily December 25, 2006)