China OKs RMB business for 4 overseas banks
(chinadaily.com.cn)
Updated: 2004-02-12 09:48

China has granted U.S.-based Citibank, HSBC of Britain and two other banks the first licenses for foreign financial institutions to handle Chinese-currency business for domestic companies.

The licenses issued this week let the banks lend Chinese yuan to private and state-owned Chinese companies, the China Banking Regulatory Commission (CBRC) announced.

Also granted licenses this week were Japan's Mizuho Bank and Hong Kong-based Bank of East Asia, the CBRC said. By the end of last year, 11 foreign banks had handed in their applications.

China has been steadily increasing foreign access to its banking market under a commitment to the World Trade Organization to open its financial industries to outside competitors by 2006.

Regulators hope the gradual opening of China's financial industries will help its own banks, stock brokerages and insurance firms catch up with richer, more sophisticated foreign rivals.

"The move allows us to enter a business arena with enormous potential," said Dandan Chang, spokeswoman of HSBC in China, which received approval from the China Banking Regulatory Commission (CBRC) on Friday.

Although only its Shanghai branch is able to conduct renminbi services with Chinese enterprises, HSBC can actually provide the services in all 13 Chinese cities that are open to foreign banks, as well as Jiangsu and Zhejiang provinces.

"But we still hope our additional applications for our six other branches will be approved soon," Chang added.

According to the CBRC's provision, all of the successful international banks should be prepared for inspection in four months. After that, they will receive the final licence to serve their Chinese clients.

"Given our seven years' experience in offering renminbi business to foreign clients, we have a sophisticated team already involved in conducting renminbi business. I think it will take us less than four months to be prepared for the new business," said Chang of HSBC.

So far, foreign banks are able to handle foreign currency business with Chinese enterprises and individuals. Moreover, a handful of foreign banks already are licensed to handle Chinese-currency business for foreign companies.

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