China opened five industrial cities to overseas lenders one year ahead of a WTO timetable, as it eases restrictions on foreign expansion in the world's fastest-growing major economy.
Foreign banks will be able to apply to start doing yuan business with local companies in Harbin, Changchun, Lanzhou, Yinchuan and Nanning a year ahead of a Dec. 1 next year deadline for the reforms, the China Banking Regulatory Commission said in a statement released yesterday at its annual press conference in Beijing.
Shantou and Ningbo opened up to foreign lenders yesterday, as originally planned under the WTO pledges made in 2001.
US and European banks, including Citigroup Inc and HSBC Holdings Plc, are attracted by China's US$1.7 trillion household savings market, where 97 percent of assets are held by domestic lenders.
Foreign banks are targeting growth in credit cards and asset management to enhance brand awareness and increase revenue.
Yesterday's announcement brings to 25 the number of cities where overseas banks can do corporate business in the Chinese currency. The government is committed to removing geographic restrictions next December and allowing foreign banks to take deposits with local residents for the first time as part of agreement when it joined the WTO in 2001.
Overseas banks are seeking ways to expand in China, spending more than US$16 billion buying stakes in local banks to tap distribution channels for their financial products. China's four largest state-owned banks have at least 77,474 branches and 19 trillion yuan (US$2.3 trillion) of assets.
As of Sept. 30, 138 foreign banks have received approval to do yuan business, 15 can conduct online banking services and 41 foreign banks can trade derivative products.
Assets of foreign lenders reached a total of 550.7 billion yuan as of Sept. 30, making up about 3 percent of assets of China's financial institutions, according to the banking regulator.
Their bad loans stood at 160 million yuan, or 0.92 percent of total advances, at the end of September, compared with 1 trillion yuan, or 10.11 percent, of the nation's four biggest state banks.
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