China to let foreign banks expand
(AP)
Updated: 2005-12-05 16:28

China plans to follow through on pledges to let foreign banks expand their operations and do more local currency business, the country's top banking regulator said Monday.

Liu Mingkang, chairman of the China Banking Regulatory Commission, said the minimum operating capital foreign bank branches must have to do business in Chinese currency will be lowered to 400 million yuan (US$50 million) from the currency 500 million yuan (US$62 million).

That change will come in an amendment of China's rules for foreign financial institutions, to be launched by the end of 2006, Liu told reporters in Beijing.

Foreign banks will also be allowed to conduct yuan services in 25 cities, up from the current 18, Liu said. The cities newly opened to such business this month include Shantou, Ningbo, Harbin, Changchun, Lanzhou, Yinchuan and Nanning.

The changes are part of China's effort to encourage foreign banks to do business in the central, western and northeastern parts of the country, Liu said.

Foreign banks have been ramping up investments and operations in China in preparation for the opening of its banking market to full foreign competition in late 2006.

China now allows 138 of the 173 foreign banks doing business on the mainland to conduct yuan services, Liu said.

Foreign banks hold assets in China totaling US$84.5 billion, about 2 percent of the total banking assets in the country, he said.