More than 10 foreign-funded banks have expressed their wish to incorporate
locally, a senior official with the China Banking Regulatory Commission told a
press conference in Beijing on Wednesday.
Xu Feng said that
the commission would release the names of the first batch of foreign-invested
banks who have submitted their applications soon after the Regulation on
Administration of Foreign-funded Banks take effective on December 11.
Xu
predicted that locally incorporated banks would account for more than half of
the turnover of foreign institutions in China.
Under the regulation, the
Chinese government encourages foreign banks to incorporate locally and set up
subsidiaries to minimize risks for Chinese customers.
If a foreign bank
continued to run its Chinese operation as branches operated from overseas, the
range of services it could offer customers would be limited.
China's
banking watchdog said that the stipulation is in line with international
practice. When liquidity risks occur, domestic customers should be given
priority in withdrawing funds. Chinese individuals who deposit money in branches
operated from overseas could find their assets at risk if the parent bank
experienced a crisis.
In a globalized world, financial risks can be
passed from one country to another. But China-registered corporate entities,
which are supervised by Chinese banking authorities, will take measures to
minimize risks and ensure domestic financial stability, they said.
The
policy favoring Chinese corporate status also complies with WTO rules, which
allow members to adopt measures of prudence when opening up the banking sector.
Prudent measures include policies that protect customers' interests,
prevent risks to the bank and safeguard the stability of financial markets.
"The Chinese government will do everything it can to facilitate the
conversion process, which will take one to three months," Wang Zhaoxing,
assistant chairman of CBRC, said earlier.
Wang said he is confident that
government departments involved -- the judicial department, the industrial and
commercial administration, and the banking regulatory commission -- will work
together in an efficient and well-coordinated manner.
A locally
incorporated bank will not be regarded as a new institution. The date on which
the foreign bank established its first branch in China will be regarded as the
beginning of its operation.
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