Foreign banks win wider RMB access
( 2003-11-07 10:47) (China Daily HK Edition)
Two years after China's entry to the World Trade Organization (WTO), foreign banks will finally be able to conduct renminbi business with Chinese enterprises, a key weapon to enhance their competitiveness in the Chinese market.
The China Banking Regulatory Commission (CBRC) announced on its website yesterday that starting from December 1, foreign banks can provide renminbi services to Chinese enterprises in cities that have already opened up the local-currency business.
Another four cities - Ji'nan, Fuzhou, Chengdu and Chongqing - will be added to the list on the same date, bringing the total number of such cities to 13, though foreign banks still have to apply for licences in each city.
At the end of July, China had approved 37 foreign banks to do renminbi business in six domestic cities, including Shanghai, Shenzhen, Dalian and Qingdao, but their renminbi customers were limited to foreigners, Hong Kong, Macao and Taiwan residents and foreign-invested enterprises.
China had promised to allow foreign banks do renminbi business with domestic enterprises two years after it became a member of the global trade body; and to remove all geographical and customer restrictions in five years.
"China has kept its promise in the opening-up of the banking industry," said Qin Chijiang, a central bank researcher and deputy secretary general of the Finance Society of China.
As the five-year grace period for Chinese banks has only half way to go, foreign banks have gradually built up local networks and allies; and the access to renminbi business will be a major boost.
Liu Mingkang, chairman of CBRC, said in August that the Chinese authorities would grant equal treatment to foreign banks in the future.
Besides setting up branches and applying for renminbi licences, foreign banks are also encouraged to buy shares in domestic banks, which helps them enter the Chinese market indirectly.
The authorities are amending regulations regarding foreign acquisitions; and insiders say the foreign institutions would be allowed to hold up to 25 per cent.
So far, the biggest stake a single foreign shareholder owns in a domestic bank is 15 per cent - International Financial Corporation in Nanjing City Commercial Bank.
At the end of July, foreign banks had set up 211 representative offices and 151 branches but they control only a small ratio of the domestic banking market.
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