China allows more foreign banks to incorporate locally
BEIJING, Mar. 7 – China’s banking regulator said yesterday it would continue to push for the local incorporation of foreign banks.
The China Banking Regulatory Commission (CBRC) also urged locally incorporated foreign banks to build a 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 the CBRC 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.According to the CBRC, foreign banks have been increasing steadily in assets, profits, deposits and loans. Outstanding non-performing loans were reduced by US$45 million year-on-year.
By the end of last year, 21 foreign banks in total – including Standard Chartered, Bank of East Asia and HSBC – had been approved to transform their Chinese mainland branches into locally-incorporated banks registered on the mainland. Among them, six have been approved to provide renminbi services and five will be able to issue bank cards.
Xinhua reports that 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 US$21 billion by October.