Regulators urged to pave the way for opening up additional branches

Roger Gifford, Lord Mayor of the City of London

Regulators in Britain and China can help more Chinese banks open branches in the United Kingdom, City of London Lord Mayor Roger Gifford said.

"We would like the regulators to be comfortable with each other so that we can have branches here as well as subsidiaries, because we would like to see more banks opening here," Gifford told China Daily.

Since the 2008 financial crisis, the Financial Services Authority, Britain's financial services regulator, has made it more difficult for some foreign banks to set up branches in the country.

Branches are offshore arms of foreign banks that the authority has less control over. Subsidiaries, in contrast, are subject to the capital requirements that apply to Britain's local banks.

Bank of China is the only Chinese bank to have a branch.

Discussions became heated a year ago when the Financial Times reported that China's largest State-owned banks are moving chunks of their European business to Luxembourg to escape tougher regulations in the City of London.

It was brought up again during the second Hong Kong-London Forum in December, when regulators from Beijing, Hong Kong and London met to discuss further cooperation between China and the UK in financial services.

During a news conference after the forum, Wang Jianxi, then executive vice-president and chief risk officer at China Investment Corp, criticized the British regulator's restrictions on Chinese banks.

"The new regulations have made it very costly for Chinese banks in London," Wang said. And if London has restrictions on foreign banks' subsidiaries, "I really doubt that Chinese banks will still see a need to have operations here", he said.