Beijing, China, 12 Dec – Eight foreign banks Monday began the process of setting up in China, on the day when China celebrated five years since it joined the World Trade Organization (WTO), officials said.
Since Monday China has had to lift all obstacles to foreign banks entering the market, under the terms of the agreement the country signed to be a member of the WTO in 2001, after a five-year grace period used to prepare domestic banks to face foreign competitors.
The banks now entering the market are Hong Kong and Shanghai Bank (HSBC), Citigroup , Standard Chartered Bank, Bank of East Asia, Hang Seng, Mizuho Corporate Bank , Development Bank of Singapore and ABN AMRO.
Foreign banks have long shown interest in entering a market that, according to sector data, is expected to be worth some US$5.1 trillion.
Deutsche Bank, Sumitomo Bank and Credit Suisse are three other banks expected to apply to set up in China.
Under the terms of the law regulating foreign banking investment in China, which was approved on November 16, the banks that set up in the country will be treated differently to those that continue to manage their representations from abroad.
Banks which have no open business in China will only be able to receive deposits from Chinese residents of over 1 million yuan, which limits them to the small, but growing market of Chinese millionaires.
Banks which set up in China directly will, according to the law, be able to operate freely within the retail market, but are subject to local regulations, which require banks to have reserves of 25 percent of deposits. (macauhub)