Chinese citizens on the mainland may soon be able to open RMB
accounts at subsidiaries of four overseas banks, namely the Hong
Kong and Shanghai Banking Corporation (HSBC), Citibank, Standard
Chartered Bank and the Bank of East Asia from April onwards.
An official with the China Banking Regulatory Commission (CBRC)
revealed that an initial inspection had been completed as relating
to the banks’ plans for creating locally registered
subsidiaries.
However, before their business can officially begin, the
financial institutions still need to file applications with the
CBRC and apply for their business licenses according to State
Administration for Industry and Commerce procedures.
Assuming that no delays occur, the banks would receive
permission to start a full-range of RMB services in early
April.
Analysts have outlined that although foreign banks will benefit
from a bracket within which to allow their own interest rates to
fluctuate, this would not translate into preferential treatment
meaning they would be expected to abide by Chinese regulations.
They could also find themselves subjected to more intense scrutiny
before being allowed to grant loans.
Without an established national presence, overseas banks would
likely not directly threaten the market penetration of domestic
rivals for the next two years, stated Guo Tianyong, an economist
from Central University of Finance and Economics.
Guo further estimated that the banks would need five to eight
years to effectively set up their Chinese business, basing his
assumption on models from other countries.
On Dec. 24 last year, the CBRC first gave the go-ahead to nine
overseas banks to prepare for the establishment of China-registered
subsidiaries.
The CBRC is still carrying initial preparation checks on the
other five banks.
Chinese law dictates an overseas bank wishing to offer all
facets of RMB business in China must create a locally registered
subsidiary bank with corporate status, without which it will be
limited to take term deposits of no less than one million yuan.
(Xinhua News Agency March 13, 2007)