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Overseas banks to move into RMB business
By Zhang Dingmin (China Daily)
Updated: 2005-12-06 05:49
China granted foreign banks more freedom to conduct the crucial local
currency business yesterday, moving ahead of its market-opening schedule as
required by World Trade Organization (WTO) commitments.
Starting yesterday, foreign banks like HSBC have been able to offer renminbi
business to Chinese and foreign businesses and foreign individuals in seven more
cities.
Shantou and Ningbo were opened up in accordance with the nation's WTO
commitments, while Harbin, Changchun, Lanzhou, Yinchuan and Nanning, which were
not on the schedule, were also opened, bringing the total number of cities to
25.
Meanwhile, the China Banking Regulatory Commission (CBRC) announced a
reduction in the highest tier of operating-capital requirement for foreign bank
branches' renminbi business to 400 million yuan (US$49 million) from 500 million
yuan (US$61 million).
The operating-capital requirement for renminbi business for branches of
foreign-owned and Sino-foreign banks was lowered to 200 million yuan (US$24
million) from 300 million yuan (US$37 million).
"These measures will certainly create an even better systemic environment for
the development of foreign financial institutions in China," said Liu Mingkang,
chairman of CBRC. "Profound changes are taking place in the opening-up and
reform of China's banking sector."
Although the liberalization moves were bolder than many expected given the
limited time left for local banks to prepare for full foreign competition, some
analysts say they demonstrate the authorities' determination to catalyze
progress in the local banking sector through competition.
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