China Approves Local Incorporation Of 9 Foreign Banks

China Approves Local Incorporation Of 9 Foreign Banks
China Approves Local Incorporation Of 9 Foreign Banks

12/25/2006, 06:59


SHANGHAI (Dow Jones)--Nine foreign banks have received approval to incorporate locally in China, according to a statement posted on China Banking Regulatory Commission's Web site Sunday, bringing them closer being able to do local-currency retail banking.  

The banks include Standard Chartered PLC (STAN.LN); Bank of East Asia Ltd. (0023.HK); Hongkong  Hang Seng Bank Ltd. (0011.HK); Mizuho Corporate Bank; Sumitomo Mitsui Bank, a unit of Sumitomo Mitsui Financial Group Inc. (8316.TO); DBS Bank, a unit of DBS Group Holdings (D05.SG); Citibank, a unit of Citigroup Inc. (C); and ABN Amro Holding NV (ABN). [ 24-12-06 0904GMT ]  

When China joined the World Trade Organization in 2001, it pledged to fully open its banking sector to foreign competition by Dec. 11 this year.  

However, China's banking law requires foreign banks to transform their China operations into a stand-alone entity in order to do retail banking in the local currency, the yuan.  

As part of local incorporation, which China says aims to protect local depositors, foreign banks are required to commit at least CNY1 billion ($127 million) in registered capital to their Chinese units and to capitalize each branch with CNY100 million.  

The CBRC's statement said the nine banks represent 34% of all foreign bank branches in China, and 55% of total assets held by foreign banks.  

It also said the locally incorporated units are all registered in Shanghai.  

The nine banks are the first batch to receive approval to incorporate locally.  

The China Banking Regulatory Commission said Sunday it approved Bank of Tokyo-Mitsubishi UFJ to incorporate locally.  

("*China Approves Sumitomo Mitsui, BEA Local Incorporation," published at 0902 GMT Sunday, misstated that Sumitomo Mitsui Bank had received approval to incorporate locally. The error also appeared in the second paragraph of "China Approves Local Incorporation Of 9 Foreign Banks," published at 0904 GMT Sunday.) [ 25-12-06 0659GMT ]